PRO-BITCOIN COLORADO GOVERNOR SIGNS CRYPTOCURRENCY-FRIENDLY BILL
Jared Polis, the Governor of Colorado, has signed a cryptocurrency-friendly bill exempting digital tokens from state securities laws — if their primary purpose is as a “consumptive.”
COLORADO DIGITAL TOKEN ACT
Last November, Former United States Representative Jared Polis, who is a known cryptocurrency and blockchain advocate, became Colorado’s Governor. On March 6, Polis has signed Colorado’s Digital Token Act. The act is expected to enter into effect on Aug 2, 2019, and it intends to cement the state’s position as a “hub for companies and entrepreneurs that seek to utilize cryptoeconomic systems to power blockchain technology-based business models.”
The new bill details the uncertainties business face when buying, selling, and even releasing their own cryptocurrencies. It likewise exempts specific digital tokens from state securities regulations.
EXEMPTIONS BASED ON PURPOSE
Colorado’s Digital Token Act will efficiently exempt cryptocurrencies from state securities laws if “the primary purpose of the digital token is a consumptive purpose.”
In addition, the law is clearly addressing the ICO (Initial Coin Offering) fundraising model. It deems that tokens issued through a crowdfunding campaign of the kind will be exempt from securities regulations if:
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.
For that very reason, digital tokens will go through securities regulations if they are used for “speculative or investment functions”.
The law likewise details how exemptions will be approved. Per the filing, each issuer of a digital token shall file a notice of intent with the securities commissioner prior to before qualifying for an exemption.
Reasons behind the passage of this bill
It’s a given that the crypto wave is sweeping across the United States. From candidates for president from both sides of the aisle supporting cryptocurrencies and accepting Bitcoin or ETH donations, the once demonized coin now stands to be in held in the same breath as the USD. Well, after a dreadful Non-Farm Payment Roll came in at 20,000 shattering expectations of 180,000, something had to be done, and rapidly. A slowdown in the creation of jobs indicates a weak point in the overall economy but there is an open window where blockchain and crypto provide limitless opportunities.
Basis for Signing the Digital Token Act
After extensive commenting and deliberation, the state find that:
- Crypto-economic systems operating off decentralized platforms form an important component of the blockchain technology. In turn, blockchain as a technology has the potential to create the web 3.0 which obviously has several advantages over existing internet systems.
- Because of the advantages of blockchain and crypto-economic systems, Colorado is increasingly becoming a hub for blockchain companies. As a result, there is need to open up funding channels for these projects and the fastest way of doing that is to reduce consumptive regulatory requirement under Article 51.
Since the advantages of restricted market investment are many and far outweigh the “costs and complexities of state securities registration”, there is need to eliminate regulatory uncertainty especially for Colorado businesses keen on utilizing blockchain and issue utility tokens.
Because of the advantages of blockchain and crypto-economic systems, Colorado is progressively ending up being a hub for blockchain business. As an outcome, there is a need to open funding channels for these projects and the fastest way of doing that is to lower consumptive regulative requirement under Article 51. Since the advantages of limited market investment are many and outweigh the “costs and complexities of state securities registration”, there is a requirement to get rid of regulatory unpredictability especially for Colorado businesses keen on making use of blockchain and problem energy tokens.
Your thoughts about Colorado’s Digital Token Act? Do you think regulation is needed for cryptocurrencies to recover and thrive? Don’t hesitate to let us know in the comments below!