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Two members of the US House of Representatives are trying to exempt cryptocurrencies and some other digital resources from federal securities laws.
The "Token Taxonomy Act" was introduced Thursday by representatives Warren Davidson and Darren Soto, a move that comes months after a panel discussion in Washington, DC, which sought guidance on regulatory measures for industry. According to the text, the bill – among other items – seeks to exclude "digital tokens" from being defined as securities, modifying both the Securities Act of 1933 and the Securities Exchange Act of 1934.
This definition has several components, all focused on a degree of decentralization in which no person or entity has control over the development or activity of an asset. This would apparently clarify the way in which cryptocurrencies that do not have a central controller will not spare a stock designation.
The bill defines "digital tokens" as "digital units created … in response to the verification or collection of proposed transactions" (mining, in practice) or "as the initial allocation of digital units that will otherwise be created" (as in a mine). These tokens must be governed by "rules for the creation and offering of digital units that can not be changed by a single person or group of people under common control".
Going deeper, a "digital token", according to the text:
"… has a history of transactions that … is recorded in a digital or distributed digital ledger, where consent is reached through a mathematically verifiable process, and … after the consent has been reached, it can not be materially modified by a single person or group of people under common control … is able to be exchanged or transferred between people without a custodian intermediary … "
And, perhaps the most important thing, according to the definition of the law, a digital token "is not a representation of a financial interest in a company, including a property or debt interest or a share of revenue".
"This bill provides the assurance that American markets must 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 keep this market alive in the United States."
Other elements
The bill also includes other crypto-friendly measures, including parts that focus on the tax implications of the purchase, sale or use of cryptocurrencies.
For example, it reflects the language in a bill introduced in September 2017 that tried to create a de minimis exemption for purchases made with cryptocurrency. As noted at the moment, since the US Internal Revenue Service considers cryptocurrencies as a type of property, transactions involving bitcoins, for example, trigger a capital gain taxable event when they are spent, even in insignificant amounts.
"The amount of income excluded from gross income under subsection (a) in relation to a sale or exchange of virtual currency must not exceed $ 600," states the new law.
Likewise, the bill seeks to trade a cryptocurrency for another tax exempt and to create a further exemption for individual pension accounts (IRAs) alongside those existing for gold bullion and other currencies. of precious metals.
The Washington Industry Support Group, D.C., Coin Center, celebrated the bill in a blog post on Thursday. "We are delighted to see a continued Congressional action to implement common sense clarifications and adjustments to the regulatory treatment of cryptocurrencies," wrote James Foust, senior researcher.
Looking forward
The presentation of the bill includes an active year at Capitol Hill for the discussion on cryptocurrencies, having witnessed a series of hearings in both Chambers of Congress.
Apart from Thursday's proposals, legislators have suggested in statements that the bill aims to lay the groundwork for further regulatory measures.
"While this legislation is a great first step, we are looking for feedback.The Federal Trade Commission (FTC) has a history of police web services, while the Commodities Futures Trading Commission (CFTC) has authority over commodity derivatives," said the representative Soto.
"To what extent does the jurisdiction of the FTC apply to digital tokens?" Has continued. "Can we tackle this problem in this legislation or will we need a subsequent legislation to effectively regulate this emerging sector?"
The complete invoice can be found below:
Tokens Taxonomy Act of 2018 by Scribd
Image of Capitol Hill via Shutterstock
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