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Friday, December 21, 2018

US politicians from both parties come together - to officially submit new pro-cryptocurrency laws! Markets are reacting with major gains...

It's actually happening! Congressmen Warren Davidson (Republican) and Darren Soto (Democrat) today introduced the "Token Taxonomy Act" - a bill that restores the rights of cryptocurrency investors, and project developers to fully participate this emerging sector.

The markets are reacting to the news with Bitcoin returning to prices above $4000, and dozens of altcoins with double-digit percentage gains as well.

So - what does this bill do exactly?

First it addresses how cryptocurrenies have been treated the same as stocks by the Securities And Exchange Commission (SEC), which claimed they were unlicensed securities.  This meant anyone who issued a token was in violation of the law.  Scared about what could happen next, many investors simply pulled out, and new investors just stayed away - making 2018 an awful year for cryptocurrency.

However, this bill would change everything - by legally declaring digital tokens not securities, therefore SEC would no longer have oversight of them. Digital currencies becomes its own asset class.  For exanple, you could own stocks and real estate investments, but the laws for buying and selling one is totally different from the other, because they are two different things.  Crypto and securities are different too, so they shouldn’t follow the same laws.

Congressmen Warren Davidson says the 1945 laws the SEC has been using to crack down on cryptocurrency investments were never intended for this, stating:

“This bill clarifies a 1946 court case that the SEC has been using to determine what a security is and effectively makes it clear that the finished product (a cryptocurrency token) is no longer a security." 

The congressmen explains that he fears unless these changes are made, the US will be excluding themselves from the innovative future potentials of the cryptocurrency markets, adding:

“This bill provides the certainty American markets need to compete with Singapore, Switzerland, and others who are aggressively growing their blockchain economies. To be certain, there will be other regulatory initiatives at some point, but this legislation is an essential first step to keeping this market alive in the United States. 

In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space”

He's right too - these excess SEC regulations have done nothing to help, and a lot to hurt. 

I've pointed out before that scamming investors with false claims in order to sell something, even a token, has and always will be illegal. So even after this bill passes any dishonest ICOs can still be shut down and charged with crimes.

The bill also instructs the IRS to make changes regarding the taxation of cryptocurrencies, transactions where one cryptocurrency was traded for another would be nontaxable, as well as simplified ways to claim gains or losses at the end of the year.

So what's next? Well, submitting a bill this close to the end of the year is really more of a way of making an announcement, showing what they intend to do in 2019.  Before actually being voted on, it will have to be re-submitted in the new year.
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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk