US State of Colorado Approves New Digital Token Legislation

North America Regulations United States
Colorado’s Digital Token Act, signed by Governor Jared Polis on March 6, puts the state among the friendliest in the US towards blockchain technology.

The Digital Token Act – a freshly-released bill, signed in to law in Colorado, has put the state among the friendliest in the US towards blockchain technology.

Signed on March 6 by the governor of Colorado, Jared Polis, State attorney general Phil Weiser, and president of the Colorado Senate Leroy Garcia, the bill exempts digital tokens that are “consumptive in nature” and provide access “goods, services, or content” from some of the current securities regulations, namely section 11-51-401 of the 2016 Colorado Revised Statutes Title 11 – Financial Institutions Securities.

The digital tokens mentioned by the bill “would not typically be treated as an investment if it is not tied or linked to the future profits and earnings of the company”.

The text of the bill also lists the requirement for companies wanting to issue a digital token under the new rules. To qualify its digital token, a company is required to file a notice of intent with the state’s securities commissioner and the good, service, or content would have to be available at the time of sale and be so within 180 days from the date of sale.

The buyers of such digital tokens have to acknowledge that they are not an investment and are prohibited from selling or transferring the ownership of their tokens.

Explaining the reasons behind the new law, the authors of the bill pointed to blockchain technology’s potential to create new forms of decentralized “web 3.0” platforms and applications that have advantages over the current centralized internet platforms and applications.

They also criticized previous regulations for putting companies seeking to issue or effect the purchase, sale, or transfer of utility tokens in a regulatory uncertainty in the state which, according to the bill has “become a hub for companies and entrepreneurs that seek to utilize crypto economic systems to power blockchain technology-based business models.”

About the author

Maciek Klimowicz

Maciek Klimowicz

A seasoned writer and editor with 10 years of experience in a variety of print and online media. Recognizing the transformative potential of the blockchain technology, Maciek has now put his pen to work to explore the key issues of this fast-evolving sector. Contact him on [email protected].

Leave a Comment

Coinlaw Newsletter

Whether you are a law firm, founder gearing-up for a token offering, or a crypto currency trader, subscribe to the biggest crypto legal newsletter to be informed of the latest developments in each and every jurisdiction