US lawmakers introduced bills that aim to create a uniform path to registration for crypto exchanges, but alongside came was a bill that, if approved, would provide some additional clarity for digital assets themselves. Representative Tom Emmer introduced the Securities Clarity Act, which would create a new definition for tokens that exist in the in-between of commodity and security. The proposed legislation creates the new denomination of “investment contract asset” for assets sold as the object of investment contracts.
The proposed bill would create clear regulations for cryptocurrencies.
The proposed bill would create a clear asset class for tokens that have long toed the line between securities and commodities. According to the Securities Act, investment contracts themselves involve a person investing capital in a common enterprise on the expectation of profits from the promoter or third party’s efforts — so investment contracts are securities. However, any wares that come with the purchase are not necessarily securities under the current laws and legal interpretations, but, as the bill points out, “the two have been unnecessarily conflated in the context of digital assets.”
“Digital tokens are set apart from their parent contracts.”
Under the existing Securities Clarity Act, digital tokens are set apart from their parent contracts, exempting them from further scrutiny as to whether they may be part of an unregistered offering based on the asset’s characteristics. Just because an investment contract is a security, an asset obtained from the contract’s purchase doesn’t automatically make the asset security as well, according to the bill. If the token weren’t security, to begin with, it’s status wouldn’t change. The bill would allow companies that have complied with current securities registration requirements, or who have qualified for an exemption, provide for the distribution of their assets to the public without fear of additional regulatory uncertainty, the lawmaker said in a press release.