Rhode Island Proposes New Laws That Would Exempt Some Blockchain Tokens from Securities Regulations
The regulations in the United States for cryptocurrency have varied over the last year. First, the complications were due to multiple federal authorities taking on different responsibilities of the assets, based on their classifications.
Then, individual states started creating their own regulations and policies about how exchanges would perform. Now, a recent house bill filed by senators in Rhode Island is suggesting changes to the security tokens laws.
The bill, which is house bill 5595, was filed on Wednesday by five Democrats and Republicans of the Senate, suggesting changes to the Rhode Island Uniform Securities Act. The change would change the definition of securities, exempting “open blockchain tokens” from its definition, subsequently keeping issuers of these tokens from having to follow the policies of the act.
However, the senators outlined that there are certain conditions that must be met to have this kind of exception. To start, the token has to have a “consumptive purpose.” Furthermore, the token must “only be exchangeable for, or provided for the receipt of, goods, services or content, including rights of access to goods, services or content.”
The second part of the conditions is that the developers and sellers of their token cannot use it as a financial investment that is sold to the initial buyer. The draft writers added,
“If the token does not have a consumptive purpose available at the time of sale, the initial buyer of the token is prevented from reselling the token until the token is available for use for a consumptive purpose.”
The legislation goes on, saying that the individuals that make the exchange of these tokens possible should not be treated the same as ones who qualify as broker-dealers, or as the ones who deal in securities.
This exception would be made if they “electronically file a notice of intent with the secretary of state,” but it must be filed in advance. While defining the open blockchain token, the legislation states that the digital unit is made and recorded in a digital ledger. It is also
“capable of being traded or transferred between persons without an intermediary or custodian of value.”
In Colorado, state senators already passed a similar bill two days ago. Right now, the only activity standing between the present status and being implemented as law is the state governor’s signature. The Colorado Digital Token Act, as it is called, was filed last month. It stated that digital tokens are not made for “speculative or investment” purchases, if they are created with a “primarily consumptive” purpose. Thus, the bill proposed that they also be exempt from securities laws.