Prohibitions relating to covered distributed ledger technology and blockchain equipment or services

(a) Prohibition on acquisition The Secretary of Defense may not acquire, or enter into, extend, or renew a contract or other agreement for, any equipment, system, or service that uses covered distributed ledger technology and blockchain equipment or services as— (1) a substantial or essential component of such equipment, system, or service; or (2) critical technology as part of such equipment, system, or service. (b) Prohibition on loan and grant funds (1) Prohibition The Secretary of Defense may not obligate or expend loan or grant funds to acquire, or to enter into, extend, or renew a contract or other agreement for, any equipment, system, or service described in subsection (a). (2) Prioritization In implementing the prohibition under paragraph (1), the Secretary of Defense, in administering a loan, grant, or subsidy program, shall prioritize available funding and technical support to assist affected entities as is reasonably necessary for those affected entities to cease use of covered distributed ledger technology and blockchain equipment or services, to acquire replacement equipment and services, and to ensure that communications service to users and customers is sustained. (c) Rule of construction Nothing in subsection (a) or (b) shall be construed to— (1) prohibit the Secretary of Defense from acquiring from an entity, or entering into, extending, or renewing a contract or other agreement with an entity for, a service that connects to the facilities of a third party, such as blockchain protocols or interconnection arrangements; or (2) apply to wireless telecommunications equipment or third-party validators that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles. (d) Effective date The prohibitions under subsections (a) and (b) shall take effect on the date that is two years after the date of the enactment of this section. (e) Waiver authority (1) In general Except as provided in paragraph (2), beginning on the effective date under subsection (d), the Secretary of Defense may, upon request of an entity, issue a waiver of the requirements under subsection (a) with respect to such entity for a period of not more than two years. (2) Requirements The Secretary of Defense may only provide a waiver under this subsection if the entity seeking the waiver— (A) provides a compelling justification for the additional time to implement the requirements of this section; and (B) submits to the Secretary of Defense, who shall not later than 30 days thereafter submit to the Committees on Armed Services of the Senate and the House of Representatives, a full and complete description of the presence of covered distributed ledger technology and blockchain equipment or services in the entity’s supply chain and a phase-out plan to eliminate such covered distributed ledger technology and blockchain equipment or services. (3) Elements of the intelligence community Beginning on the effective date under subsection (d), a head of an element of the intelligence community may waive the requirements under subsection (a) if such head determines the waiver is in the national security interests of the United States. (f) Definitions In this Act: (1) The term covered distributed ledger technology and blockchain equipment or services means distributed ledger technology and blockchain equipment or services of or originating from a foreign adversary, including any of the following companies or subsidiaries thereof: (A) The Blockchain-based Services Network. (B) The Spartan Network. (C) The Conflux Network. (D) iFinex, Inc. (E) Red Date Technology Co., Ltd. (2) The term executive agency has the meaning given the term in section 133 of title 41, United States Code. (3) The term foreign adversary has the meaning given such term in section 7.2 of title 15, Code of Federal Regulations. (4) The term intelligence community has the meaning given the term in section 3 of the National Security Act of 1947 (50 U.S.C. 3003).