U.S. House Representative Warren Davidson (R) has announced plans for introducing legislation to regulate Initial Coin Offerings (ICOs) and cryptocurrencies, Cleveland.com, local media agency of Ohio reports on December 3.
As per the report, Davidson announced his intention with the new legislation at the Blockchain Solutions Conference. The bill is expected to create an “asset class” for digital assets and cryptocurrencies, which “would prevent them from being classified as securities, but would also allow the federal government to regulate initial coin offerings more effectively.”
Under the current regulation, state regulatory agencies categorize tokens which places them in their jurisdiction. This development will clarify the terms of U.S. cryptocurrency regulations.
The Commodity Futures Trading Commission (CFTC) considers cryptocurrencies as commodities whereas the Securities and Exchange Commission (SEC) regard them as mostly as securities.
Simply put, the CFTC considers cryptocurrencies more similar to gold than with securities or currency since there is no third party involved in cryptocurrency leaving it as the commodity for which no one is liable. The U.S. agency managing anti-money laundering (AML), and know your client (KYC) standards the Financial Crimes Enforcement Network (FINCEN) looks it as money. Similarly to FINCEN the U.S. Office of Foreign Assets Control (OFAC) the body that enforces economic sanctions also view it crypto as money and blacklists wallets of sanctioned individuals. Lastly, the Internal Revenue Service (IRS) handles them as property, for which the profit from buying and selling of cryptocurrency are subjected to capital gains tax.
Jay Clayton, the SEC Chairman in September received a letter from a group of U.S. Congressional representatives calling for “clearer guidelines between those digital tokens that are securities.”
That same month, nearly 45 representatives from Wall Street firms and major crypto companies attended a Congressional roundtable to discuss ICO regulations and cryptocurrencies. The meeting was hosted by Davidson, where experts expressed their concerns about the lack of clarity ion regulatory status of cryptocurrency and also discussed “token taxonomy.”
Earlier Davidson expressed his support towards the cryptocurrency industry hinting that the ICO market needs a “light touch” of regulations. In November, a spokesman of U.S. rep. said that Davidson is a bill which once passed would treat ICOs as products rather than securities at state and federal level, effectively sidelining the security laws.