The US Reps Warren Davidson and Darren Soto have followed up on their promise to provide a clear regulatory framework for the country's crypto industry, by releasing a new bill to the House on Thursday, Dec 20.
According to a CNBC report, the new bill is called the “Token Taxonomy Act” and notably offers a new definition for digital tokens (cryptocurrencies) including those issued by ICOs.
The Congressmen are proposing that cryptocurrencies do not fit with the Howey Test which the U.S SEC has used to classify the asset class till date.
Under the SEC definition, cryptocurrencies are securities if the investor hopes to make a profit off the effort of the issuer. But that definition does not align with digital tokens as the new bill explained.
Cryptocurrencies may have features similar to securities, but they also have distinct attributes that traditional financial instruments like stocks and shares do not have. They can be traded without a third party intermediary and blockchain applications can still be built upon it.
So they should not be regulated with laws that were created many decades before it was invented.
Implications Of The Token Taxonomy Act
Under the new Token Taxonomy Act proposed by the Reps., all crypto tokens will be allowed to exist as an asset class or commodity that will be regulated by the Federal Trade Commission or the Commodity and Futures Trading Commission (CFTC).
The new regulatory oversight will ease ICOs of the current heavy burdens being imposed by the SEC. The regulators have fined several ICOs such as CoinAlpha, Paragon, and Airfox for failing to register with them before engaging in the alleged sale of securities.
Although these may have been promising projects, the SEC has made it difficult for them to thrive and labeled almost all of them as non-compliant.
But if the new bill becomes an approved law, then more promising ICOs are likely to emerge to boost the U.S potential of dominating the global blockchain and crypto industry.
Another area the bill sought to address is crypto taxation. The Reps are proposing that crypto traders should not be charged taxes for covering one cryptocurrency to another and also that the current tax burden is reduced.
The Token Taxonomy Act will be reintroduced to the House early next year for further studies since the U.S Congress meets for the last time on Friday.