The consolidation of cryptocurrencies as payment methods, security and utility tokens that perform a specific task in our current financial landscape, has represented a positive development, but also a regulatory challenge, since the legal framework was not entirely prepared for their rise to prominence.
Lawmakers in the United States of America are pushing for cryptocurrencies and other digital assets to be
The “Token TaxonomyAct”
There are two members of the House of Representatives that are looking for promoting the “Token Taxonomy Act” in order to exclude these assets from being considered or being defined as “securities.”
For reference, securities refer to a proof ofownership or debt that has a definite value and can be sold. Those who hold securities have them as an investment with the potential to generate them a profit.
The mentioned act was introduced on Thursday by lawmakers Warren Davidson and Darren Soto, several months after a meeting in Washington, the country’s capital city, to discuss the regulatory framework of such assets. The proposed bill would mean an amendment of 1933’s Securities Act and 1934’ Securities Exchange Act.
The basis of the legislators’ theory is that there is no entity or individual controlling the cryptocurrencies’
The Definition of Digital Assets, According to the Bill
According to the text, cryptocurrencies, defined as “digital tokens” in the bill, are “digital units created… in response to the verification or collection of proposed transactions or as an initial allocation of digital units that will otherwise be created.” To earn the qualification, the coins, or tokens, need to be run by “rules for the digital unit’s creation and supply that cannot be altered by a single person or group of persons under common control.”
To be more precise, the text explains digital tokens this way: “…has a transaction history that…is recorded in a distributed, digital ledger or digital data structure in which consensus is achieved through a mathematically verifiable process; and…after consensus is reached, cannot be materially altered by a single person or group of persons under common control;…is capable of being traded or transferred between persons without an intermediate custodian…”
The legal document also includes other crypto-friendly measures. It also focuses on the tax implications of cryptocurrency transactions like buying, selling, or exchanging.
The most thorough argument in favor of the lawmaker’s document is that a digital token “is not a representation of a financial interest in a company, including an ownership or debt interest or revenue share.”
In a separate statement, Davidson stated that the bill provides the certainty American markets need to compete with Singapore, Switzerland, and others who are aggressively growing their blockchain economies. There will be other regulatory initiatives at some point, but this legislation is an essential first step to keeping this market alive in the
By Andres Chavez