January 07, 2019 | AtoZ Markets Senators of Colorado state Stephen Feinberg (Democrat) and Jack Tate (Republican) jointly filed a bill dubbed the “Colorado Digital Token Act", which aims to provide additional exemptions to the cryptocurrencies, certain digital tokens and traders from securities laws.
Main Points of the New Document
According to the U.S. media politicians have proposed that digital tokens with a “predominantly consumer” purpose be exempted from securities laws if they are not sold for “speculative or investment” purposes. As the aforementioned senators explained, this step is aimed to eliminate “regulatory uncertainty”, which can deter firms offering tokens' trading platforms and others seeking to raise funds using digital assets. According to the crypto market experts, the new Colorado digital tokens' law “will allow this region's enterprises using crypto-economic systems to receive capital for growth and development and expansion of their business, thereby contributing to the formation and growth of local companies." Also, according to the proposed bill, the new reform will help creating new jobs making this state a center for companies which work on the new forms of decentralized platforms and web applications. Reforms occurring on the background of increased activity of the local regulators which are seeking to formalize the local crypto market and eliminate fraudulent trading companies.
New Bill Clarifies Digital Tokens Definition
A “digital token” in a document is defined as a digital unit with certain characteristics, protected by a decentralized ledger or database, subject to exchange for goods or services and capable of exchange or transfer between persons without an intermediary or custodian of value.” In the new document, the consumer's goal of using digital tokens is defined as “providing or receiving goods, services or content, including access to goods, services or content”. According to the new bill, in order to be eligible for exemption, the purpose of consuming a token must be available within 180 days from the time it was sold or transferred, and the original buyer cannot resell or transfer the token until the consumption target is available. In addition, the bill states: "The initial buyer clearly understands that the original buyer purchases a digital token with the main intention of using the digital token for consumer purposes, and not for speculative or investment purposes."As an exception, the issuer must submit a notice of intent to the state commissioner for securities, adds the bill. “The bill provides for limited exceptions to the requirements for registration of securities and licensing of broker-dealers and sellers for persons working with digital tokens,” the proposal summary says.
Previous Attempts Were Unsuccessful But There is Still Hope
Last May, Senate canceled a previous attempt to manage the identification of tokens, which would clarify whether such digital tokens are securities. Lawmakers hope that public awareness of crypto and blockchain would increase in the future. "The Blockchain technology has the potential to create new forms of decentralized platforms and applications", which have advantages over existing centralized Internet platforms and applications," continues the bill, pointing on that Colorado has become "a hub for companies and entrepreneurs who seek to use crypto-economic systems to support blockchain-based business models.”
Think we missed something? Let us know in the comments section below