US Congressmen Davidson and Soto Introduces “Token Taxonomy Act” for Exemption of Cryptos from Securities
As blockchain technology is being more widely accepted across various sectors and industries, with ICOs still booming despite the cryptocurrency market crisis of 2018, two US Congressmen were able to recognize the necessity of providing regulatory certainty within blockchain economy and blockchain-based industries.
Entrepreneurs, businesses, consumers, and regulators are all facing a backlash partially due to the fact that regulatory bodies in many countries observe cryptocurrencies and digital assets in general as securities.
The definition of security, in a nutshell, describes securities as financial or investment instruments, while the two US Congressmen aim to provide a light regulatory basis for cryptocurrencies that should further classify digital assets as non-securities.
Token Taxonomy Act by Soto and Davidson to Exempt Cryptos from Securities Laws
Token Taxonomy Act was first presented on December 20th in an official press release where it was reported that two US Congressmen, Warren Davidson of Ohio 8th district and Darren Soto from Florida’s district 9, have compiled a light regulatory basis for cryptocurrencies.
This act should exempt digital assets from the law regulating securities in the United States.
Token Taxonomy Act is a long-awaited regulatory proposal and should provide a solution for preventing fraudulent activities within various blockchain and ICO ecosystems alongside providing fertile soil for innovation that includes blockchain technology.
The act is thus settling a definition of digital assets, exempting cryptocurrencies from the laws under which securities are being regulated as this regulatory certainty should also free the Securities and Exchange from performing consumer protection duties in the scenario that includes regulating cryptocurrencies as securities or currencies.
Token Taxonomy Act represents a major move in legislating digital assets, however, the Congressmen claim that they are still looking for feedback from the Commodities and Futures Trading Commission and the Federal Trade Commission.
As Congressman Soto claims, they need the feedback from FTC and CFTC in order to find out whether the act will need subsequent legislation in order to address this issue.
70-Year-Old Legal Standards Not Good Enough for Cryptocurrency Regulation
As Davidson and Soto emphasize, the law under which securities are being regulated and legislated by comes from 1933 and 1934, represented through Securities Act and Securities Exchange Act, cannot be effective and efficient for regulating digital assets.
The 70-year-old regulations are not innovative enough in order to adapt to the growing influence of blockchain technology, alongside following the general interest in cryptocurrencies.
Although digital assets can be invested in and profited from, just like it is the case with securities, the Congressmen stated that the Taxonomy Act for digital assets should allow the United States to embrace the present digital revolution, just like it was the case with the Internet.
That is how new regulations that exempt cryptos from securities laws may allow blockchain industry to develop in the US so that the US market of digital assets and blockchain technology can compete with countries like Switzerland and Singapore, who had already embraced blockchain technology.
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