Some the US congressmen seek to release cryptocurrency from any obligation to securities law. If their plan works, then we can be sure to expect a new system of regulation for digital assets in the US.
Possibilities For Crypto Exemption Abound
Rep. Darren Soto (D-Florida)and Rep. Warren Davidson (R-Ohio) presented on Thursday a “Token Taxonomy Act” bill which aims to make cryptocurrencies exempted from being grouped as securities. The passing of this bill means one thing, and that is, digital asset tokens will no longer be subject to US securities law the moment the projects attain full network functionality.
The securities law system currently applied to cryptocurrencies by the SEC draws strength from the Securities Act of 1933. In the year 1956, the “Howey Test” came along courtesy of the US Supreme Court to help in the determination of which asset to qualify as security.
From the rules set provided by the Howey Test, investment contracts fall under the category of transactions that are securities. Therefore, from this definition, it can be deduced that the majority of ICO tokens are securities according to the SEC. This comes as a result of the investments individuals make in these ICOs with profit-making being the end game.
The crypto market has been found to be different from the conventional one, and that is what the Congressmen are basing their argument on, by seeking a review of the 70-year old Securities Act. Many industry stakeholders also share the same position, one of them being Kristin Smith. The Blockchain Association chief, Kristin Smith, said:
“These decentralized networks don’t fit neatly within the existing regulatory structure. This is a step forward in finding the right way to regulate them.”
Regulations Tailored To Suit Cryptocurrency
The efforts of the bill sponsors bring back memories from when the Internet was first introduced. Rep. Davidson made a comment saying:
“In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space.”
Certain people hold the opinion that the SEC has no business with the regulation of cryptocurrency and one of them is John McAfee, a crypto enthusiast, and Internet Security, expert. He takes the constant interference of the SEC as encroachment and has never ceased to express his dislike for the situation, especially on Twitter. Here is one of his posts:
“Finally!!! The sane elements of our government are introducing laws to restrict the SEC. The laws will legally prevent the SEC from interfering in any way in the workings of the Crypto world. About fucking time!!!”
The success of the lawmakers might usher into the US an era of cryptocurrency-specific regulations. Supervision of the industry might now be granted to organizations like the Federal Trade Commission or Commodity Futures Trading Commission (CFTC).