The Token Taxonomy Act is believed to be the most powerful pro-cryptocurrency bill among all those that have so far been discussed. This is because the bill will once more give the citizens of the United States the freedom to fully participate in the crypto markets by giving tokens to their proper legal classifications.
What is Token Taxonomy Act?
The project was introduced on the 20th of December last year by Congressmen, Warren Davidson and Darren Soto in order to provide light-touch regulatory certainty for the blockchain and virtual currency industry. Due to the current lack of blockchain knowledge and guidance, the Act serves as an important step towards providing the much needed regulatory clarity.
With its main focus on cryptocurrencies, the act would exempt these digital tokens from the definition of a security for purposes of both the Securities Act of 1933 and the Securities Exchange Act of 1934. Also, the ACT provides several tax law changes and establish an exception for certain virtual currency transactions. This Act is expected to be introduced soon and begin the process of becoming a law.
Currently, the US cryptocurrencies are classified as securities, therefore, oversights of them goes to the Securities Exchange Commission (SEC), therefore as mentioned above the Token Taxonomy Act takes this on directly and removes the SEC oversight and the security classification.
According to Congressman Davidson, the bill clarifies a 1946 court case that the SEC has be using to find out what a security is , making it effectively clear that crypto coins are no longer a security. The Congressman adds that;
“This bill provides the certainty American markets need to compete with Singapore, Switzerland, and others who are aggressively growing their blockchain economies. To be certain, there will be other regulatory initiatives at some point, but this legislation is an essential first step to keeping this market alive in the United States.”
This statement proves that the Congressman is fully aware of some of the major issues causing the United Stated to lag behind when it comes to crypto and blockchain developments.