Colorado’s Digital Token Act Clarifies which Tokens are Securities, Effective August 2, 2019
The recently passed Colorado Digital Token Act is currently waiting for the governor’s signature to be effective. If the governor signs the Act as soon as March 8, it will be effective on August 2, 2019. This would allow businesses to transfer digital tokens using blockchain technology.
Regulating Virtual Currencies in the United States
This Act focuses on different aspects related to the use of digital currencies. The distribution, consumption and production of goods will be exempt from the Colorado Securities Act (CSA). That means that individuals dealing with virtual currencies will not have to be licensed as a broker-dealer and salesperson.
It is important to mention that persons that deal with virtual currencies will have to file a notice with the Colorado Securities Commissioner to ensure that they satisfy the exemption. The tokens used by the user should also be used for consumptive purposes.
That means that the offer and sale of virtual currencies must have a consumptive purpose within 180 after the sale. Thus, the token cannot be sold for speculative purposes. Interested individuals will be able to use virtual currencies to purchase goods or services, including content, but will not have the possibility to use the assets as an investment.
This Act defines digital tokens as a digital unit that can be deployed on the blockchain network, recorded in a digital ledger and it is verified in a decentralized and mathematically verified method. Moreover, they added that it is possible to transfer these virtual currencies between persons without having a custodian or intermediary.
This is not the first state of the US that passes a blockchain and crypto-related bill. Indeed, Wyoming has passed two blockchain bills related to tokenization and compliance. These bills were passed a few weeks ago and enhance the position of the state in the country. Wyoming is also recognizing digital currencies as money and has entered into effect on March 1st.
There are different jurisdictions around the world that are trying to regulate the crypto market. Malta and Switzerland are two of these countries implementing clear and friendly crypto regulations for companies to settle their operations in their territories.
The U.S. Securities and Exchange Commission (SEC) has also been trying to improve its presence regulating the crypto space. During the last months, the SEC has issued several enforcement actions against different Initial Coin Offerings (ICOs).