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Defining cryptocurrencies has been an ongoing difficulty in the industry as multiple branches within the United States have different ways to govern it. However, one ongoing debate is over whether certain tokens should be considered securities.
US Representative Warren Davidson is aiming to withdraw any concerns in the matter by bringing back a bill that was already seen last year, allowing cryptocurrencies to be free of securities laws.
The bill, called the Token Taxonomy Act, was brought to Congress for the second time on Tuesday, as Davidson stated that its approval would “send a powerful message” to the innovators in the industry. Davidson believes that making the US the “best destination for blockchain” would benefit both the crypto market that this fintech resides in, while bringing business into the United States.
The original version of the bill was introduced late last year, at the tail end of the legislation session. Having been submitted so late in the game, it never really stood a chance of getting anywhere, but it nevertheless became the talk of cryptoland for a hot minute.
The act would amend the Securities Act of 1933 and the Securities Exchange Act of 1940, granting regulators such as the U.S. Securities and Exchange Commission (SEC) clarity on how they may enforce securities laws surrounding cryptocurrencies.
Clarification of Whether a Digital Token is a Security or Not
Jerry Brito, Executive Director of Coin Center clarified the new bill saying:
“The Token Taxonomy Act clarifies when a digital token is a security and when it is not. It largely mirrors the SEC’s approach to date but creates a sharper line in legislative language that should reduce uncertainty.”
Congressman Davidson is sure that the Act is key to unlocking the full potential of blockchain technology in the US.
While the SEC has released staff-level guidance explaining how it might verify whether token sales are securities offerings, it remains unclear how cryptocurrencies that are not being used for fundraising might be classified.
In addition to Davidson and Soto, Reps. Josh Gottheimer, Tedd Budd, Scott Perry, and Tulsi Gabbard – who is currently running for president – are cosponsoring the 2019 version of the bill.
Five of the cosponsors, excluding Perry, are members of the House Financial Services Committee.
“It Is Time to Step Up and Lead in a Blockchain Technology”
Rep. Darren Soto said that it is time for the United States to step up and lead in blockchain technology, and added:
“After months of public input, our Token Taxonomy Act and the Digital Taxonomy Act add critical definition and jurisdiction to create certainty for a strong digital asset market in the United States. This is an important step to promoting innovation and maximizing the potential of virtual currencies for the U.S. economy, all while protecting customers and the financial well-being of investors.”
The new bill could give the Federal Trade Commission $25 million in funding to go right after nefarious actors in the digital resource market.
Some said that the bill might also provide the agency, which seeks to protect the interests of United States consumers and fight anti-competitive company practices, with authority that “would supersede the Commodity Futures Investing Commission. ”
Nevertheless, a Soto spokesperson told that this is inaccurate.
“Nothing in this Act shall supersede the authority of the Commodity Investing Commission nor prevent treatment of electronic tokens as commodities subject to the particular Commodity Exchange Act, ” the particular bill reads.
Just for a reminder, yesterday, the U.S. Securities and Exchange Commission (SEC), that has long been criticized for a lack of clarity on crypto regulation, has finally released its guidance that makes it clear on which cases tokens are considered securities.