In the first step of a long legislative process, the Token Taxonomy Act is being re-introduced in the U.S. Congress. Although the bill is likely to go through many transformations if it ever passes, it’s nonetheless a positive indication that the regulatory consensus is changing regarding cryptocurrencies.
Warren Davidson (R), a Representative from Ohio, has just re-introduced a bill into Congress regarding the legal status of tokens. The bill, called the Token Taxonomy Act, seeks to amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude digital tokens from their definition of a security.
The bill proposes a few promising aspects that cryptocurrency believers support and feel are desperately needed in the space.
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The Proposed Changes
- As already mentioned, the law seeks to make cryptocurrencies exempt from securities law.
- Calls on the SEC to enact regulatory changes specifically geared towards digital units secured through public key cryptography.
- Change the tax code for virtual currencies stored in individual retirement accounts.
- Make trading one cryptocurrency for another tax-exempt, only tax cryptocurrency trades when they are converted to cash.
- Clarify the conflicting state initiatives and regulatory rulings which have been inconsistent in providing proper guidelines.
The proposed bill differs, however, from what was put forth last year. For example, it includes preemption provisions which would supersede state regulations. It also more clearly outlines guidelines for the Commodity Futures Trading Commission and the Federal Trade Commission.
The main focus of the bill, however, lies in its clear assertion that cryptocurrencies should not be considered securities, which opens the door to them being an altogether new legal category.
Although the vote on the Token Taxonomy Act will likely not take place until late this year, its re-introduction points to just how pressing regulatory clarity on blockchain technology is becoming.
According to Representative Darren Soto (D) from Florida, who first introduced the bill together with Davidson in 2018, the goal is to ultimately position the United States as the leader in this sector. “It is time for the United States to step up and lead in blockchain technology,” he said.
What are the chances that these significant changes to U.S. securities law are made this year? ? Let us know your thoughts in the comments below.