The Congressmen Warren Davidson and Darren Soto announced the Token Taxonomy Act, H.R. 7356. The main intention behind this act is to provide a clear regulatory environment for businesses and companies in the blockchain environment.
The legislation clarifies how to define a digital token and how securities laws apply to companies that work with blockchain technology. One of the main issues that this bill clarifies is a court case that the SEC use to determine what a security is.
Congressman Warren Davidson commented on the matter:
“Providing this much needed certainly frees the SEC to perform its vital and much-needed consumer protection duties of enforcement on those who have engaged in securities fraud by making false claims or simply attempting to engage in regulatory arbitrage to circumvent securities law.”
There are several countries that are growing their blockchain economies and landscapes. Some of these nations are Singapore or Switzerland. Companies are settling their operations in these countries because they offer clearer regulations than the United States.
Congressman Darren Soto said that although the legislation is a great first step, they are looking also for feedback to improve it. They have been working for several months to create the H.R. 7356 Token Taxonomy Act. Several participants have given their opinion about it and the whole crypto space.
At the end of 2017 and the beginning of 2018, hundreds of new Initial Coin Offerings (ICOs) were released to the cryptocurrency market. These companies sold tokens in order to gather funds for their blockchain-related projects. However, the legal system was not developed yet in order to receive such an influx of new companies.
Some of these projects have been involved in fraudulent activities and did not comply with the current laws in the United States and other countries. This is why regulatory agencies have been trying to create new frameworks for these companies to operate in a regulated market.
Additionally, some companies decided to leave the United States seeking more clear rules and frameworks.
During the last few years, governments around the world have been imposing new regulations on the market. Countries such as Japan or Thailand have been working in order to provide clear information to investors and companies in the market. The United States is also trying to find better regulatory frameworks for the future.