H.R. 10544

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10544 Introduced in House (IH)]

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118th CONGRESS
2d Session
H. R. 10544

To specify the treatment of covered non-fungible tokens under the 
securities laws, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

December 20, 2024

Mr. Timmons (for himself and Mr. Torres of New York) introduced the 
following bill; which was referred to the Committee on Financial 
Services

_______________________________________________________________________

A BILL

To specify the treatment of covered non-fungible tokens under the 
securities laws, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``New Frontiers in Technology Act''.

SEC. 2. TREATMENT OF COVERED NON-FUNGIBLE TOKENS UNDER THE SECURITIES 
LAWS.

(a) In General.--For purposes of the securities laws--
(1) a covered non-fungible token is not an investment 
contract; and
(2) an offer or sale of a covered non-fungible token is not 
a transaction in a security.
(b) Definitions.--In this section and section 3:
(1) Covered non-fungible token.--
(A) In general.--The term ``covered non-fungible 
token'' means any non-fungible token which was 
developed primarily for personal, family, or household 
consumption, including--
(i) a work of art, musical composition, 
literary work, or other intellectual property;
(ii) a collectible, merchandise, virtual 
land, or video game asset;
(iii) a digital identifier or other 
certificate or credential;
(iv) an affinity, reward, or loyalty point; 
or
(v) a right, license, membership, or 
ticket.
(B) Exclusion.-- The term ``covered non-fungible 
token'' does not include a non-fungible token that is 
marketed by an issuer or promoter--
(i) primarily as an investment opportunity; 
or
(ii) that promises future actions or a 
series of actions designed explicitly and for 
the purpose of increasing the value of the 
covered non-fungible token.
(2) Non-fungible token.--
(A) In general.--The term ``non-fungible token'' 
means any asset--
(i) which is of such uniqueness or limited 
production that it can be independently 
assessed or identified;
(ii) which is represented by a unique 
digital identifier;
(iii) the record of ownership of which is 
recorded on a cryptographically secured public 
distributed ledger;
(iv) which--
(I) is a digital equivalent of a 
tangible or intangible good; or
(II) has some other inherent 
function beyond the fact that the 
record of ownership of the asset is 
recorded on a cryptographically secure 
public distributed ledger; and
(v) the record of which can be exclusively 
possessed and transferred, person to person, 
without necessary reliance on an intermediary.
(B) Exclusions.--The term ``non-fungible token'' 
does not include--
(i) any note, stock, treasury stock, 
security future, security-based swap, bond, 
debenture, evidence of indebtedness, 
certificate of interest or participation in any 
profit-sharing agreement, collateral-trust 
certificate, preorganization certificate or 
subscription, transferable share, put, call, 
straddle, option, privilege on any security, 
certificate of deposit, or group or index of 
securities (including any interest therein or 
based on the value thereof); or
(ii) any asset which, based on its terms 
and other characteristics, is, represents, or 
is functionally equivalent to an agreement, 
contract, or transaction that is--
(I) a contract of sale of a 
commodity (as defined under section 1a 
of the Commodity Exchange Act) for 
future delivery or an option thereon;
(II) a security futures product;
(III) a swap;
(IV) an agreement, contract, or 
transaction described in section 
2(c)(2)(C)(i) or 2(c)(2)(D)(i) of the 
Commodity Exchange Act;
(V) a commodity option authorized 
under section 4c of the Commodity 
Exchange Act; or
(VI) a leverage transaction 
authorized under section 19 of the 
Commodity Exchange Act.
(C) Rule of construction.--Nothing in this 
subsection may be construed to create a presumption 
that a non-fungible token is a representation of any 
type of security not excluded from the definition under 
subparagraph (B).
(3) Securities laws.--The term ``securities laws'' has the 
meaning given that term in section 3(a) of the Securities 
Exchange Act of 1934.

SEC. 3. STUDY ON NON-FUNGIBLE TOKENS.

(a) In General.--The Comptroller General of the United States shall 
carry out a study of non-fungible tokens that analyzes--
(1) the nature, size, role, purpose, and use of non-
fungible tokens;
(2) the similarities and differences between non-fungible 
tokens and other digital assets, including payment stablecoins, 
and how the markets for those digital assets intersect with 
each other;
(3) how non-fungible tokens are minted by issuers and 
subsequently administered to purchasers;
(4) how non-fungible tokens are stored after being 
purchased by a consumer;
(5) the interoperability of non-fungible tokens between 
different blockchain systems;
(6) the scalability of different non-fungible token 
marketplaces;
(7) the benefits of non-fungible tokens, including 
verifiable digital ownership;
(8) the risks of non-fungible tokens, including--
(A) intellectual property rights;
(B) cybersecurity risks; and
(C) market risks;
(9) whether and how non-fungible tokens have integrated 
with traditional marketplaces, including those for music, real 
estate, gaming, events, and travel;
(10) whether non-fungible tokens can be used to facilitate 
commerce or other activities through the representation of 
documents, identification, contracts, licenses, and other 
commercial, government, or personal records;
(11) any potential risks to traditional markets from such 
integration; and
(12) the levels and types of illicit activity in non-
fungible token markets.
(b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General shall make publicly available a 
report that includes the results of the study required by subsection 
(a).
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