US State Exempting Blockchain Tokens From Securities Laws
Lawmakers in Rhode Island, one of the states in the U.S., are set to making a giant leap in the cryptocurrency world. Apparently, they are looking to exempt blockchain tokens directly from securities laws for a couple of use cases.
The Move to Exempt Tokens
According to the official report, at least five Democratic and Republican senators worked for hand in hand to file house bill 5595, proposing the idea of amending the Rhode Island Uniform Securities Act. The latter, in particular, will be amended to state and, thus, establishing the narrative that both developers and sellers of the so-called “open blockchain tokens” are not to be categorized as issuers of securities. And as such, they are to be exempted from the act.
As far as the exemption is concerned, it is going to be provided but under some certain conditions. For starters, the main purpose of a token must be meant for a consumptive purpose. In addition, it should only be seen as exchangeable. What is more, the lawmakers want it to be provided for the purpose of receiving content, services, and goods, as well as the inclusion of rights to access them.
Moreover, sellers and/or developers of tokens are not allowed to sell it to the initial buyer, especially if it is deemed a financial investment. The lawmakers added if the token is proven unable of consumptive purpose – only during the availability at the time of sale – then the initial buyer of the token is going to be prevented from reselling it. Unless it undergoes the consumptive purpose, the token will remain void for selling.
Defining a Blockchain Token
The proposed legislation further covers people who tend to spearhead the exchange of open blockchain tokens. To put it simply, these individuals are not to be treated as brokers-dealers, let alone be seen as individuals who deal in securities. However, this description is only possible if and only if they file in advance (could be done electronically) a notice of intent addressed with the secretary of the state.
According to the bill, open blockchain token is defined as a digital unit that is both created and recorded in a digital ledger. What is more, a token has the ability to be traded and/or transferred between individuals regardless of the existence of a custodian or intermediary of value.
Apparently, a similar bill was recently passed in Colorado as well courtesy of the state’s senators. As of press time, it is currently awaiting the much-needed signature from the state governor prior to its transition into law.