US Lawmakers Look to Exclude Cryptocurrency From Definition of a Security and Limit SEC’s Role in Crypto Regulation

Two US lawmakers are planning to introduce a bill that would change the Securities Exchange Act and potentially prevent any and all cryptocurrencies from being labeled as a security.

The Token Taxonomy Act is being introduced in the House of Representatives by Ohio Republican Warren Davidson and Florida Democrat Darren Soto. If it passes, the law would ensure that “securities laws would not apply to cryptocurrencies once they become a fully functioning network.”

Representative Davidson says the bill would provide long-awaited clarity and ensure that the US can capitalize on the emerging industry.

“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.”

In June, SEC Chairman Jay Clayton told CNBC that the agency has no plans to amend SEC’s standards on its own. Clayton has stated that all initial coin offerings are inherently securities.

“We are not going to do any violence to the traditional definition of a security that has worked for a long time. There’s no need to change the definition.

A token, a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say ‘you can get a return’ – that is a security and we can regulate that. We regulate the offering of that security and regulate the trading of that security.”

Clayton has also said many coins already in existence are potentially securities as well, although the head of corporate finance at the SEC William Hinman said in June that both Bitcoin and Ether are not securities because the platforms lack a central controlling body.

Image via Wikimedia Commons

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