Financial Innovation and Technology for the 21st Century Act

New Title II (Clarity for Assets Offered as Part of an Investment Contract) codifies the principle that a digital asset offered or sold pursuant to an investment contract is not automatically a security, providing legal certainty for token sales structured as investment contracts.

Exclusions for 'ancillary activities' in both SEC and CFTC registration titles were replaced with broader 'exclusion for decentralized finance activities,' potentially widening the scope of exempted DeFi-related conduct.

New section 112 (Application of the Bank Secrecy Act) added to Title I, and new section 607 (Study on expanding financial literacy amongst digital asset holders) added to the Innovation title.

New beneficial ownership disclosure requirement: persons who beneficially own 5% or more of outstanding units of a digital asset must file a report with the SEC at a time the Commission determines appropriate.

New self-custody protection (section 105(d)): FinCEN may not issue any rule or order that would prohibit a U.S. individual from self-custody of digital assets.

New provision in the digital commodity definition (CEA section 1a(55)(C)): if a federal court in an SEC enforcement action determines a digital asset transaction is not an offer or sale of a security, units transferred pursuant to that transaction are treated as digital commodities unless the determination is overturned.

Digital asset issuer definition restructured: the anti-evasion language was removed from the definition itself and made a separate standalone prohibition (subsection C). A new exclusion was added for persons who deploy source code creating units distributed only through end user distributions.

Digital commodity custodian definition broadened from 'a bank or trust company' to 'an entity in the business of holding, maintaining, or safeguarding digital commodities for others,' removing the restriction to regulated financial institutions.

A 'rule of construction' paragraph was added to the digital asset definition stating that nothing in the definition creates a presumption that a digital asset is a representation of any type of security not excluded from the definition.

Bank exclusions added to both digital commodity broker and digital commodity dealer definitions under the CEA, mirroring existing bank exclusions in the Securities Exchange Act. Banks engaging in certain banking activities with respect to digital commodities are no longer treated as brokers or dealers.

New section 413 (Discretionary Surplus Fund) added to the SEC registration title, and new section 510 (Funding for implementation and enforcement) added to the CFTC registration title, establishing dedicated funding mechanisms.