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Bill To Exempt Cryptocurrencies From Securities Laws Introduced In House

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A Bill to exempt cryptocurrencies and other digital assets from federal securities laws was introduced in the House of Representatives.

The long-awaited Token Taxonomy Act, to provide regulatory certainty for businesses, entrepreneurs and regulators in the blockchain economy, was introduced by Reps Warren Davidson (OH-08) and Darren Soto (FL-09).

The bipartisan legislation defines a "digital token" and clarifies that securities laws do not apply to companies that use blockchain once they reach their goal of becoming a functional network. Implementing this will stop fraud from spreading and provide the certainty innovation needs to flourish, according to the lawmakers.

The Bill seeks to amend both the Securities Act of 1933 and the Securities Exchange Act of 1934.

It also includes other crypto-friendly measures as well, including parts that focus on the tax implications of buying, selling or using cryptocurrencies.

"This bill provides the certainty American markets need to compete with Singapore, Switzerland, and others who are aggressively growing their blockchain economies," Davidson said in a statement.

Soto said that along with this legislation, they are looking for feedback on to what extent does the jurisdiction of the Federal Trade Commission (FTC) apply to digital tokens, and whether subsequent legislation is needed to effectively regulate this emerging sector.

H.R. 7356, The Token Taxonomy Act, is the product of months long collaboration following a bipartisan roundtable discussion with Members of Congress and nearly 50 stakeholders from Ohio and across the country to gather input on Congress' effort to clarify the "sloppy" regulatory framework in the cryptocurrency space.

Many entrepreneurs and businesses use distributed ledger or blockchain technology to launch initial coin offerings (ICOs) to raise the capital they need to innovate, grow their businesses, and create more jobs.

A patchwork of judicial rulings and conflicting state initiatives have clouded certainty for these companies and is motivating market players to leave the U.S. for the certainty provided elsewhere.

In this context, it was Davidson who took the initiative to draft legislation to address this issue.

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