Colorado Lawmakers Introduce a New Bill to Exempt Cryptocurrencies from Securities Law
Crypto enthusiasts and particularly residents of the U.S. State of Colorado have a reason to cheer. Last week on Friday, January 4, the Colorado lawmakers introduced the “Colorado Digital Token Act” that introduces limited exemption on cryptocurrencies from the securities law.
The draft of the Digital Token Act reads: “The bill provides limited exemptions from the securities registration and securities broker-dealer and salesperson licensing requirements for persons dealing in digital tokens.”
Under the current state of securities law, the local businesses of Colorado are facing regulatory uncertainty which is causing a hindrance in their growth. The bill notes that “The costs and complexities of state securities registration can outweigh the benefits”.
The local news publication Colorado Sun states that “If a token doesn’t qualify under the Colorado safe harbor” law, it needs to be “analyzed under typical securities law, or what is known as the Howey Test.”
In April 2018, Colorado lawmakers introduced the bill titled the “Virtual Currency Exemption Money Transmitters Act”. The bill was initially passed with a single vote, however, was later withdrawn and lawmakers took a different stand.
Sen. Jack Tate, R-Centennial, who has co-sponsored the bill, has worked with regulators and the local finance and blockchain companies over the last six months. The senator said that unlike last year wherein the bill was introduced without any stakeholder input, this year they adopted the programmatic approach with the nascent stage blockchain technology.
Stephanie Copeland, the outgoing executive director of the Colorado Office of Economic Development and International Trade, said: “The process was incredibly helpful for us to sort through what needed legislation and what just needed to be clarified through guidance. The way we got there was by sorting the work into the main problem statements the community believed were the biggest inhibitors. … This bill was one of the only ones that we felt necessary to move forward.”
The U.S. SEC has so far maintained an uncertain stand on introducing national level regulations. Hence state legislatures are taking action to protect their local investors.