The news of a bill in Congress to provide clarity on the SEC token definition has been widely hailed by crypto-philes. However, current events suggest that any actual legislation will take months — or even years — for ratification.
The bill, introduced just before the current shutdown by two representatives — Warren Davidson (R-Ohio) and Darren Soto (D-Florida) — is titled the “Token Taxonomy Act.”
The central goal of the bill is to redefine a “security” by amending the Securities Act of 1933, as well as the Securities Exchange Act of 1934. The amendment would create a new category to define digital currencies — thereby shifting enforcement to the Federal Trade Commission (FTC).
Long time, no action
The bill’s presentation was met with much fanfare in the cryptocurrency community but was almost immediately shelved due to the holiday break in Congress and the subsequent shutdown. However, with the government shutdown on a temporary pause this week, hopes for passage have been renewed.
These hopes, however, will likely not be fulfilled.
I don't know if there's any validity to the rumor that the Token Taxonomy Act will be reintroduced in Congress on February 14, but even if true, there will be months or years of Committee hearings & revisions before the bill could even possibly see a vote. Don't hold your breath.
— Jake Chervinsky (@jchervinsky) January 26, 2019
Very simply, Congress moves slowly — particularly with items of major import that would change long-standing precedents. Even with a Feb 14 reintroduction of the bill for consideration, such a massive policy shift would require bipartisan support, extensive debate, and committee consideration. Each of these likely will cause extensive delays.
Something’s gotta give
Though the actual changes to the laws surrounding cryptocurrencies are still far in the future, the very introduction of a bill on the floor of Congress is good news.
Devotees have argued that the archaic rules in the original securities definitions are unhelpful, at best, in the digital age. The advent of digital financial instruments, like Bitcoin (BTC), has brought to light the work that must be done to bring governmental definitions up to date.
However, with the influx of new users into the crypto economy, government ire has been raised. The Securities and Exchange Commission (SEC) is not wont to make major policy changes — and events like the recent VanEck-SolidX Bitcoin ETF proposal withdrawal makes this clear.
Further, the potential for fraud in the initial coin offering (ICO) world has also raised a number of red flags in both the financial and legal sectors. With consumers at risk — and legacy financial instruments and definitions failing to meet the needs of the day — a standoff can’t be too long coming.
Think the Token Taxonomy Bill will see the light of day this congressional term? Or is it just a crypto pipe dream? Let us know in the comments below!
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