Lawmakers from the state of Colorado in the United States have put forth legislation that seeks to have digital currencies and other tokens be exempted from securities laws.
Colorado Seeking To Become a Hub
The two lawmakers, Senator Stephen Fenberg from the Democratic Party and Senator Jack Tate from the Republican Party, came together and submitted the bill which is being called the Colorado Digital Token Act. The bill puts forth the proposal that digital tokens whose main purpose is consumptive should not be required to adhere to the securities laws. According to the bill this exemption should only apply in the event that the tokens have not been introduced for the purposes of speculating or investing.
The proposed bill seeks to get rid of regulatory uncertainty for crypto based businesses which provide marketplaces for the digital tokens. The bill also aims to clarify the classification of tokens for the firms seeking to raise funds via digital assets.
An excerpt from the proposed bill states that the Colorado Digital Token Act will make it possible for Colorado businesses that utilize the economic systems coming with the Crypto sector to not only grow in terms of capital but also in terms of business expansion. The bill goes on to say that with this growth and expansion of businesses, will boost the promotion and formation of local companies which will in turn promote job creation in the state. Apart from this, the Colorado Digital Token Act will help put Colorado on the map as a hub for progressive companies developing and employing platforms and applications that use the new disruptive technology.
Conditions To Qualify For An Exemption
The document describes the consumptive purpose of virtual currencies as being the ability to allow holders give or receive either goods, content or services. The document goes on to state that this includes the ability of digital currencies to provide access to th said goods, services or content.
In order for the exemptions to apply to a token, the token must already have a consumptive purpose 180 days before it goes on sale or is transferred to another holder. The initial buyer of the token cannot resell the token or transfer it to another holder until the consumptive purpose of the token is made accessible.
The bill goes on to specify that the initial buyer should be able to provide an acknowledgement that they are acquiring the digital token with the main aim of using the token to access goods, services or content and not as a tool for investment or for speculative purposes. It also explains that for the issuer of the token to receive the exemption, they have to go to the securities commissioner of the state and file a notice of intent.
The Token Taxonomy Act
A similar bill was filed last month. The proposed bill was dubbed the Token Taxonomy Act. It was filed by two House of Representatives’ members, who are looking to have digital tokens be excluded from the definition of securities.