Ohio Congressman Drafting Legislation for ‘Non-Security’ Digital Asset Class
Congressman Warren Davidson represents Ohio’s 8th District. In a recent speech on December 4th 2018, Davidson highlighted a new bill that his office is drafting. The bill claims to feature a tradable token which is not classified as a security.
A Potentially New Digital Asset Regulation in the United States
Representative Warren Davidson is very close to publicly releasing a bill which would create a new digital asset class according to US regulations.
By the end of 2018, Representative Davidson says that a new bill will seek to establish the classification of a token that can be traded, without being deemed a security.
It was unclear as to precisely which regulatory body would maintain oversight of the new non-security digital asset— should the bill witness approval. Davidson did acknowledge that the new regulatory structure would not necessarily be governed by the Securities and Exchange Commission (SEC).
The representative’s office has been working on the bill for several months. In a September 2018 press release, Davidson described how Initial Coin Offerings (ICOs) along with Distributed Ledger Technology (DLT) “have outpaced current law and court decisions”.
The same press release highlighted his belief that the current regulatory framework fails to efficiently govern emerging classes of digital assets:
“…early attempts to regulate digital currencies have frustrated entrepreneur’s dreams with complex regulation and costly compliance. New York’s BitLicense is a perfect example of this ineffective complexity. Disparate courts decisions and enforcement actions were causing capital to flee the U.S. for more certainty in foreign markets – like Switzerland. In May, I went public with a pledge to introduce a bill creating legislative certainty for the U.S. ICO market. This bill aims to clarify the roles of regulators, protect consumers, address national security concerns, and facilitate a pro-growth environment for companies to raise capital.”
Ultimately, Davidson fears that if the US neglects to provide a new regulatory framework for digital assets, business will go elsewhere.
Cryptocurrency Regulation in the US and Abroad Explained
SEC Chairman Jay Clayton has consistently implied that since the majority of cryptocurrencies function as securities, they are subject to existing securities laws.
Yet other jurisdictions throughout the globe have provided different solutions.
The Maltese Parliament has passed three bills in 2018 that provide a novel framework for the regulation of digital assets.
Switzerland is also known to have regulatory friendly guidelines. Recently, these resulted in the world’s first transfer of digital equity on Ethereum, according to Tokenestate.
Yet the SEC has dramatically increased regulatory enforcement in recent months— both ICOs and exchanges have seen hefty penalties.
Due to the SEC’s stance, many companies in the blockchain sector have transitioned to security tokens, thereby avoiding the regulatory ambiguous ICO.
Representative Davidson’s new bill has the potential to significantly impact such circumstances. First however, it must get through the House, and then through the Senate.
What do you think of Representative Davidson’s prospective bill? Will the rest of Congress and the Senate support the regulation of a new digital asset class? Let us know what you think in the comments below.
Image courtesy of Bloomberg.
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