Two members of the US House of Representatives have tabled a new bill before the Congress on Thursday to exclude cryptocurrencies from the standard securities laws.
This bipartisan bill called the ‘Token Taxonomy Act’ was presented by Reps. Warren Davidson, R-Ohio and Darren Soto, D-Florida. In September, Rep. Davidson hosted a roundtable in Washington, DC, to discuss the cryptocurrency-related bill and regulatory shortcomings towards the nascent industry. More than 50 participants from the financial industry participated including experts from Fidelity, Nasdaq, State Street, Andreessen Horowitz, and the U.S. Chamber of Commerce.
The bill, if passed, will amend the Securities Act of 1933 and the Securities Exchange Act of 1934, and is seeking to exclude ‘digital tokens’ from being defined as securities.
Rep. Davison, in a statement, said: “In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space.”
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Although the Securities and Exchange Commision (SEC) does not see Bitcoin and Ethereum as securities due to their decentralized structure, its approach for tokens issued by other blockchain projects is totally different. The agency has busted many token-issuing startups for fraud and noncompliance to securities laws. Earlier this year, SEC Chairman Jay Clayton clarified that the watchdog agency has no intention to improvise rules for determining which tokens are and which are not securities.
The tabled bill was also welcomed by the blockchain lobbyist groups. CNBC quoted Kristin Smith, head of the Blockchain Association: “These decentralized networks don’t fit neatly within the existing regulatory structure. This is a step forward in finding the right way to regulate them.”
Both the representatives are also optimistic and believe that the bill will create a secure market for the nascent blockchain industry in the US preventing entrepreneurs from fleeing to crypto-friendly regions like Singapore or Switzerland.
“While this legislation is a great first step, we are looking for feedback. The Federal Trade Commission (FTC) has a history of policing web services, while the Commodities Futures Trading Commission (CFTC) has authority over commodity derivatives,” Rep. Soto stated. “To what extent does the jurisdiction of the FTC apply to digital tokens? Can we address this issue in this legislation or will we need subsequent legislation to effectively regulate this emerging sector?”