The US state of Montana has passed a bill to exclude utility tokens from the list of securities.
The bill, dubbed “Generally revise laws relating to cryptocurrency,” was introduced by State Representative Shane Morigeau (Democrat) and was finally signed into law by state governor Steve Bullock, effective July 1.
Wyoming passed a bill recognizing crypto as money.
Colorado passed cryptocurrency exemptions to its digital token act.
Montana has recognized utility tokens and exempted them from state securities by passing a new bill this month.@APompliano virus is spreading!
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— Crypto Kanoon (@cryptokanoon) May 25, 2019
Defining utility tokens
The new law recognizes utility tokens and defines them as a digital unit that is created and recorded on a blockchain and can be exchanged without the involvement of a third-party. Emphasizing the non-securities part of the utility tokens, the bill defines them as a unit “without vesting the holder with any ownership interest or equity interest in the issuer.”
Moreover, to qualify as a utility token, the bill defines a number of requirements, most notably, a token has to be “primarily consumptive” and its trading based on speculation or investment purpose has to be checked. The legislators restricted the use of utility tokens only to provide or receive goods, service, or content.
Though the Montana lawmakers took a big step towards defining digital currencies, the law is only confined to the state boundaries and has no impact on the federal regulation of crypto.
Crypto-friendly US states
Montana has now joined the ranks of other crypto friendly stats in the country like Wyoming and Colorado to legalize digital currencies. The legislators of the state of New Hampshire also introduced a bill earlier this year to legalize payments and taxes in Bitcoin and other cryptocurrencies in the state agencies.
Meanwhile, a Texas lawmaker moved a bill in the house to ban all anonymous transactions using digital currencies within the state borders. This echoed a similar recommendation by a French finance committee to ban all privacy-oriented cryptocurrencies.