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The US Congress will strive to resolve Crypto's "regulatory uncertainty" after all. Hold your applause; it's not necessarily a good thing.
On Tuesday, Congressman Warren Davidson (R-Ohio) re-introduced the law on the taxonomy of tokens, a law to exempt certain tokens and digital badets from federal securities laws, thus saving "digital tokens" SEC laws and allowing cryptos to circulate freely in the country. earth, forever and forever, amen. Or that's how it sells, at least.
The original version of the bill was introduced at the end of last year, at the end of the session. After being submitted so late in the game, he never really had a chance to achieve a result, but he nevertheless became the star of cryptoland for a hot minute.
This time, the law on the taxonomy of chips will have a say in the halls of Congress, and the representative Davidson has brought reinforcements of great value: the Democratic candidate for the presidential election Tulsi Gabbard (D – HI), a known crypto hodler. Gabbard revealed last year that she had bought about 1,001-15,000 USD from ETH in December 2017, which means that she had either made a bandit a month later, be obtained absolutely rekt with the rest of you.
"In Hawaii and across America, local and state leaders are exploring the potential of blockchain technology to create and develop economic opportunities," Gabbard said in a statement.
"With the introduction of the Token Taxonomy Act today, Congress has the opportunity to ensure that these efforts not only protect investors, but also the promotion of innovation as well as new business opportunities that allow to more diverse districts like mine the digital economy. "
Gabbard relying on the Token Taxonomy Act could give him a good dose of political capital, but the new bill remains as flawed as the first – if not worst .
"I can not imagine worse legislation for blockchain entrepreneurs, regulators or markets than this one," says Gabriel Shapiro, DLx Cryptography Law Advocate.
Cryptographic rights
Version 2.0 of the Token Taxonomy Act is virtually identical to the original version. It sought to amend the Securities Act of 1933 and the Securities Exchange Act of 1940 by adding exemptions for what the bill defines very narrowly (and yet vague) as a "digital token". . "
There are, however, two notable differences: light change the definition of "digital token" and a provision that explicitly prevents any state law that sets its own rules for badets and numerical values.
Yeah, that includes Wyoming, Colorado, and the various other states that have pbaded or proposed versions of the Wyoming Public Services Act.
If the law on taxonomy of tokens, if adopted and promulgated as it stands, would expand the Securities Market Improvement Act – a law that would give the federal government increased regulatory power over securities at the end of the year. 1990s – in an "unprecedented" way, says the crypto lawyer.
The bill would essentially prohibit states from "regulating any aspect of selling digital tokens other than total fraud," says Shapiro. To call this an insult to the rights of the states would be to say very nicely.
A dizzying definition of digital badets
Under the Token Taxonomy Act, all states in the Union would be required to comply with the federal government's definition of "digital tokens" as set out in the bill.
In theory, a common definition of a token exempt from securities law might seem perfectly questionable – even the kind of "clear English" guidance that the market demands.
But be careful what you want.
Despite an attempt by lawmakers to clarify its definitions, the changes are actually immaterial, and the language remains just as confusing, says Shapiro.
"If the test is adopted, instead of determining whether a token is a guarantee under the Howey test and having more than 70 years of jurisprudence and regulatory guidance on how that test is applied, blockchain entrepreneurs and their lawyers may consider litigating. a void, the meaning of phrases such as "mathematically verifiable process", "consensus", "financial interest in a business or partnership", etc. He said.
This is the problem of asking politicians to integrate distributed technology into a single, uniform law. he it's not easy .
Matt Corva, General Counsel of ConsenSys (which funds Decrypt), has been support legislative efforts surrounding digital badets, including the law on taxonomy of tokens when it was introduced. Corva says, however, that we must act with caution. "This thing is evolving. A definition that we propose today must be time-tested because it is very difficult to change the laws. Our well-meaning definitions today may prove inaccurate within six months. "
Shapiro, however, is convinced that the Token Taxonomy Act would be a huge step backwards: "Even Howey's status quo, as vague and frustrating as it is, is certainly superior," he says.
Cui bono?
Is the bill good for no matter what ?
Yeah-the lawyers Shapiro said.
The provisions of the proposed law essentially give sellers of tokens a "get out of jail" card if they can demonstrate a "reasonable and good faith belief" that they are not selling a title, he says. he. It would also require the SEC to notify these shillings of any securities law violations within 90 days.
Expect a "new wave of IOCs, speculative legal memos / opinions for US token sellers and protracted and unpredictable litigation," if that solution is adopted, Shapiro says.
Oh good for crypto journalists too.
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