US New Approach on Crypto Regulation: “Digital Assets are not securities”
Since the beginning of the year the investment in cryptocurrencies has reached a record level of $4.2 billion, reflecting growing interest from institutional investors.
Major companies have announced in the recent months that they will accept cryptocurrencies to buy their products or services. As an example, Tesla began to invest part of their portfolio ($ 1.5 billion) in Bitcoin.
Significantly, at the same time, Congressman Warren Davidson has reintroduced the idea of the Token Taxonomy Act to the american Congress. This bill would make crypto and other digital assets exempt from the Securities Law (1933) and the Securities Exchange Act (1934).
The bill would also fundamentally change the tax payment structure for cryptocurrencies held in investment accounts, which may further incentivize investment in digital assets over traditional stocks.
Davidson affirms that the bill would provide a “viable federal regulatory framework” for digital assets within the USA, ensuring a further flourishing of the industry. Also, as the blockchain projects have become more attractive to entrepreneurs, establishing the appropriate regulatory environment would mean that the opportunities and advancements promised by blockchain innovation occur in the USA.
However, the introduction of this bill to the Congress is not new, it represents the congressman’s third attempt. Davidson introduced the Token Taxonomy Act (TTA) in 2018 and again in 2019 with no success.
To Regulate or To Ban?
Crypto-Friendly countries such as Ireland, Malta, Portugal or Singapore have been an attractive destination for these companies and investors that see the cryptocurrency as the ultimate innovation.
As with any big disruptive innovation, some countries have become global advocates, while others have actively banned cryptocurrencies altogether.
For example, India has recently forbidden the use of cryptocurrencies. The country’s bill, labeled as one of the world’s toughest policies against cryptocurrencies, would consider those investors who own, issue, trade and transfer crypto assets as criminals.
The move has been on the government’s agenda since January, which is preparing to create its own official digital currency.
What will be the impact?
Jordi Esturi, Blockchain & 4.0 tech consultant and Marketing Specialist at inlea, concludes that “Although it is still too early to know which way it will go, many have been the countries that recently have given legal coverage to cryptocurrencies and then attracted many businesses to operate under their legislation becoming a haven for all kinds of crypto-related startups. If this new approach consolidates, and finally the US decides to create unique regulations for digital assets it will virtually become one of the best jurisdictions on which to carry on crypto-related operations, a game changer for the industry.”
We will have to keep a close eye on it and see how it develops during the following months.
