Dima Zaitsev, Head of International PR at ICOBox, shares his thoughts on US crypto legislation
On December 20, 2018, the “Token Taxonomy Act” was proposed to the US Congress. The bill is bipartisan effort by lawmakers to classify cryptocurrencies separately from traditional securities. The bill’s sponsors are hoping to foster innovation in the crypto space by freeing crypto from being subject to US securities laws.
Recently, many ICO tokens have been classified as securities under the Howey test, which the Securities and Exchange Commission (SEC) has used since 1946 to determine whether an asset is a security. Tokens have often been classified as securities because investors buy tokens that they expect to increase in value down the road, due to a third-party’s endeavors.
Filing with the SEC to register as tokens as securities can be a cumbersome, expensive and time consuming process that many blockchain startups are simply unprepared to handle in their early stages.
Both lawmakers and industry leaders have expressed concern that old legislation could significantly hinder blockchain techs’ potential. The bill stipulates that once a virtual token’s network is fully functioning and online, US securities laws will no longer apply.
Dima Zaitsev, Head of International PR at ICOBox, comments, “Legal uncertainty and SEC crackdowns caused a wave of panic and stifled innovation in 2018. The US is recognizing that crypto does not fit neatly into old regulatory boxes. It has to be treated as its own unique entity.”
This is likely one of the first steps in moving towards crypto-specific legislation. Once out of date rules are left by the wayside, a new legal framework tailored around crypto will be established quickly.