Lawmakers in Colorado plan to introduce a bill that would exempt cryptocurrencies from securities laws.
If the “Colorado Digital Token Act” passes, cryptocurrencies that are designed for a specific use case will not be labeled as securities.
To meet the exemption, a given digital asset would need to highlight a clear use case within 180 days of its initial sale.
The use case would offer details of specific goods or services that are tied to the digital asset. Absent a product, the cryptocurrency would likely be labeled as a security.
As stated in the bill,
“The issuer of the digital token markets the digital token to be used for a consumptive purpose and does not market the digital token to be used for a speculative or investment purpose.”
“‘Consumptive purposes’ means to provide or receive goods, services, or content, including access to goods, services, or content.”
To qualify for an exemption, companies will need to file a notice of intent with their state’s securities commissioner.
The bill was introduced by two state senators. Democrat Stephen Fenberg and Republican Jack Tate say their goal is to remove regulatory uncertainty.
“Creating a Colorado Digital Token Act, with limitations to protect consumers, will enable Colorado businesses that use cryptoeconomic systems to obtain growth capital to help grow and expand their businesses, thereby promoting the formation and growth of local companies and the accompanying job creation and helping make Colorado a hub for companies that are building new forms of decentralized ‘Web 3.0’ platforms and applications.”
The Colorado proposal comes on the heels of similar legislation in the US House of Representatives that would ensure that “securities laws would not apply to cryptocurrencies once they become a fully functioning network.”