Congressman Warren Davidson of Ohio (R) began a pivotal process in the cryptocurrency world by writing legislation that will address all of the ambiguity that now exists in the US laws governing tokens.
Everyone knows of the confusion and flaws of the SEC ’s application of regulations created for equity shares being applied to tokens, forcing all coins to be classified as security tokens whether they are actual financial instruments or utility tokens. The enforcement of these regulations can be extremely severe and even criminal.
Last September, Congressman Davidson and Congressman Darren Soto of Florida (D) convened a roundtable of crypto industry companies to provide feedback concerning the most urgent issues that need to be addressed in any future legislation. The roundtable along with previous and subsequent discussion with various US companies in the industry has resulted in the Token Taxonomy Act of 2018 (H.R. 7356), introduced yesterday in Congress.
The legislation seeks to get the definitions and terms right before proceeding to subsequent issues such as BSA/AML, custody, tax, and trading. It also introduces new terms to define certain elements, including a definition for “digital tokens”. Much of this is to create congruency for regulators to use as currently many have different definitions/terms to describe the same thing. Most notably, under the bill’s definition, a digital token “is not a representation of a financial interest in a company, including an ownership or debt interest or revenue share.” This could have a huge impact on tokens issued in the US
“This bill provides the certainty American markets need to compete with Singapore, Switzerland, and others who are aggressively growing their blockchain economies,” Davidson said in a statement. “To be certain, there will be other regulatory initiatives at some point, but this legislation is an essential first step to keeping this market alive in the United States.”
The Token Taxonomy Act will be reintroduced when the new Congress convenes in January. Congressman Davidson’s office has reached out to several blockchain companies, recruiting them to help educate members of Congress about H.R 7356. As Davidson’s office puts it, “It’s not partisanship that’s the barrier, its lack of understanding”.
Everyone with a stake in the blockchain economy should look to contact their congressmen and educate them as to the importance that H.R 7356 and what it could mean for the future of blockchain startups in the U.S.