The Token Taxonomy Act, first introduced in 2018, seeks to exempt certain cryptoassets from federal securities laws in the hopes of boosting innovation in the US blockchain sector.
Ohio Congressman Warren Davidson, who reintroduced the bill on April 9 following months of public consultation and revisions, said if passed, the law would “clarify the numerous conflicting state initiatives and regulatory rulings, and [a] patchwork of judicial decisions, that have clouded certainty for entrepreneurs and businesses that use blockchain technology.”
“The Token Taxonomy Act is the key to unlocking blockchain technology in America… Without it, the US is surrendering its innovative origins and ownership of the digital economy to Europe and Asia. Passing this legislation, Congress would send a powerful message to innovators and investors around the world that the US is the best destination for blockchain technology,” added Congressman Davidson, in a statement announcing the bill.
“As blockchain technology continues to emerge, it is clear that there must be a framework in place that not only provides a much clearer path forward for open blockchain projects, but also will establish the United States as a leading force in this space,” added Congressman Josh Gottheimer, a co-sponsor of the bill.
As with the previous version, the 2019 Token Taxonomy Act would amend the Securities Act of 1933 and the Securities Exchange Act of 1940 in order to exempt certain cryptoassets from federal securities laws.
The contentious issue of whether a particular cryptoasset falls under the scope of existing securities laws is one the US Securities and Exchange Commission (SEC) attempted to address, with mixed results, in its recent guidance paper.
If passed, which is quite possible given its bipartisan support, the new bill could create a level of regulatory certainty for the blockchain sector that the SEC has, so far, been unable to provide.
“The Token Taxonomy Act of 2019 will further clarify the Digital Token definition to be more inclusive of changing technology. Jurisdictions for the FTC and CFTC were also cited to strengthen protections for consumers. While there have been many positive laws concerning crypto regulation, others like New York’s onerous BitLicense law have been heavy-handed. A preemption provision was included to ensure The Token Taxonomy Act provides the certainty innovation needs to flourish,” concluded Congressman Davidson’s statement.
Authored by Congressman Warren Davidson and co-sponsored by Representatives Darren Soto, Josh Gottheimer, Ted Budd, Tulsi Gabbard, and Scott Perry, the full text of the bill can be read here.