Even as the amount of initial coin offerings (ICOs) and amounts invested in these have dropped over the past year, members of the U.S. House of Representatives have found it important enough to classify token offerings distinctly from securities and away from the purview of the Securities and Exchange Commission (SEC).
Ohio Rep. Warren Davidson, along with Florida Rep. Darren Soto, registered H.R. 7356, the proposed Token Taxonomy Act, they expect will allow companies to operate without being burdened with extra demands.
One of the bill’s provisions is an amendment to the 1933 Securities Act, which will explicitly exclude a”digital token” from the definition of a security.
Listed one of exemptions to SEC control will likely be transactions involving the development, offering, or purchase of a”electronic unit” if it is shown to be an electronic token. In the event the Commission can show such digital unit to be a security, however, a thing using an ICO will have 90 days to inform the public on this, stop sales, and repay shareholders.
The bill is supposed to clarify a 1946 court ruling that provides the’Howey Test’ as way of determining what a security is, which Brooklyn Judge Raymond Dearie invoked last September in stating that ICOs involve securities.
Considering the SEC’s functions, Davidson said, will free the regulator up”to perform its vital and much needed consumer protection duties of enforcement on people who have participated in securities fraud by making false claims or just attempting to engage in regulatory arbitrage to bypass securities law”
Davidson added that businesses will be better positioned to compete with those in other nations that boost their own blockchain industries, for example Singapore and Switzerland.
Though not specifying how firms with ICOs will be regulated instead of the SEC, the Ohio lawmaker said,”there will probably be other regulatory initiatives at some point, but this legislation is an essential first step to maintaining this market living in the USA.”
Co-author Soto, of the Democratic Party, stated that with the invoice currently filed, they were open to comments regarding the role the Federal Trade Commission (FTC) and Commodity Futures Trading Commission (CFTC), that considers cryptocurrencies as commodities, may play in regulating ICOs.
The Republican Davidson has also filed a bill to allow the Secretary of Treasury to accept public contributions to fund a U.S.-Mexico border wall, a advocacy on which President Donald Trump ran as a candidate in 2016. Davidson has also suggested that such donations be in the form of’wall coins’ powered by blockchain.