Token Taxonomy Act reintroduced

In the third attempt by Ohio congressman Warren Davidson to get the House of Representatives to take up the issue of cryptocurrency regulation, the Token Taxonomy Act, a bipartisan bill, was reintroduced on Monday March 9. The Token Taxonomy Act, proposed under H.R. 1628 is an amendment to the Securities Act of 1933 and the Securities Exchange Act of 1934 with the specific intent to exclude digital tokens from the definition of a security.

Previous attempts of introducing the legislations were made in 2018 and 2019, however these never made it to a vote in the House.

According to a Davidson, the window to establish a regulatory framework for cryptocurrency in the US is closing. And it is something that industry players have repeatedly said is lacking. Davidson said:

“If we don’t act quickly, the United States will be left behind. Other countries have found ways to regulate blockchain projects and, in doing so, have made themselves more attractive to entrepreneurs. By establishing the appropriate regulatory environment, we can make sure that the opportunities and advancements that blockchain innovation promises will happen here in the United States, for the benefit of Americans.”

The bill further includes a proposal to make crypto-to-crypto transfers tax exempt and change the tax structure for cryptocurrencies held in an individual retirement account. 

One of the co-sponsors of the bipartisan bill, representative Darren Soto (D) of Florida said the bill would “add critical definition and jurisdiction to create certainty for a strong digital asset market in the United States.”

There is some opposition to the bill as it is believed that though endorsed by the nonpartisan Blockchain Association, it could lead to the wrong kind of regulatory clarity. A federal definition of a digital token might run into opposition Some states, such as Wyoming, have already created their own rules around cryptocurrency securities and a federal ruling in the matter can interfere. Following their ruling, cryptocurrency exchange Kraken have been issued with a banking-license in the state of Wyoming.