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US lawmakers are trying to rid the cryptocurrency community from regulators, with their dubious and vague policies. On December 20, Republican Warren Davidson, a congressman from Ohio, and Democrat Darren Soto of Florida presented to the congress the Token Taxonomy Act.
If the bill receives the force of law, then cryptocurrencies will cease to be a phenomenon that the Securities and Exchange Commission (SEC) has the right to regulate.
The Token Classification Bill, introduced by Warren Davidson and Darren Soto, defines “ digital token ” and clarifies that securities laws should not apply to cryptocurrents when they are used in a fully functioning network.
“At the dawn of the Internet, Congress passed a law that provided clarity and opposed the desire to regulate the market excessively. We want to achieve a similar effect in the American economy to ensure the leadership of our state in this innovative space , ”said Davidson.
Representatives of the cryptocurrency industry for a long time insist that the existing laws do not meet the realities of the new market. Now for the classification of investment proposals as a security test is used Howie, originating in a court decision in 1946.
According to this decision, any transaction that has the characteristics of an investment contract automatically becomes a security. According to the US Securities and Exchange Commission (SEC), the conclusion of an investment contract consists in “transferring money to a joint venture related to the expectation of profit, based solely on the actions of the organizers or third parties”.
Experts believe that there are a number of nuances that must be considered.
“Decentralized networks do not really fit into the current regulatory structure. Today we are taking a step towards finding the right way to regulate them , ”said the head of the blockchain Association, which lobbies for the interests of the industry in Washington, Christine Smith.
Earlier, SEC head Jay Clayton made it clear that he was not going to change the current standards and adapt them to digital assets. The agency continues to classify initial coin placements as a securities offer, excluding only Bitcoin and Ethereum from the general canvas, which are regulated by the Commodity Futures Trading Commission (CFTC).
Davidson and Soto propose amendments to the Securities Act of 1933 and the Securities Exchange Act of 1934, adding the definition of a digital token.
As explained by Smith, the latter initiative does not mean that cryptocurrencies will not be regulated at all, but if it passes, the developing industry will come under the control of the Federal Trade Commission and the CFTC.
In addition, the authors of the bill call on the SEC to change the principles of taxation of virtual currencies, making the fact that one cryptocurrency exchange for another is a non-taxable event and setting a minimum limit that will allow tax transactions to be released below a certain limit.
The development of the bill was carried out for several months. More than 50 industry participants, including representatives from Fidelity, Nasdaq, State Street, Andreessen Horowitz, and the US Chamber of Commerce took part in the discussion of regulatory issues held in September. According to supporters of changes, until the regulation becomes extremely clear and is not adapted to the changed conditions, the cryptocurrency industry cannot develop. There is also a risk of outflow of promising projects abroad.
The last meeting of the Congress is likely to take place this Friday. After that, the proposal will have to draw up again when the control will go to the Democrats.
“We see interest from both camps. Representatives of both parties are involved in the discussion and lay the foundations for the work of the next Congress , ”added Smith.
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