Less than a week after the SEC’s FinHub published a “Framework for ‘Investment Contract’ Analysis of Digital Assets,” U.S. federal legislators introduced two ambitious bi-partisan bills supporting the U.S. blockchain industry. Could this signal the beginning of “Crypto Spring?”
It has been an eventful few days in the crypto community, especially for the lawyers.
Less than one week after the U.S. Securities and Exchange Commission’s (the “SEC”) Staff released a landmark “Statement on “Framework for ‘Investment Contract’ Analysis of Digital Assets,” announcing FinHub’s publication of an analytical token framework (the “Token Framework”) and the Division of Corporation Finance’s first digital asset sale-focused no-action letter (the “TKJ No-Action Letter”) (collectively, the “Token Guidance”), U.S. federal legislators introduced two ambitious bills expressly aimed to support the U.S. blockchain industry: the Token Taxonomy Act of 2019 (H.R. 2144) (the “TTA”) and the Digital Taxonomy Act (H.R. 2154) (the “DTA” and, together with the TTA, the “Bills”).
Controversy has, predictably, ensued.
But as blockchain lawyers throughout the Twitter-verse, the LinkedIn-mosphere and beyond issue-spot and analyze the potential implications, complications and limitations of the Bills and the Token Guidance, let’s pause for a moment to reflect on how remarkable and powerful it is to have broad bi-partisan support for non-security token sales. In the past 10 days, federal regulators and legislators may have breathed new life into a U.S. blockchain and crypto industry that – outside of states like Wyoming – had begun to resemble a repeat of the traditional financial space, including with respect to who may participate.
For those who sounded the death knell for the non-security token sale, it is time to unring that bell.
A Hunger for “Clarity”
While reportedly not timed in reaction to the SEC’s April 3, 2019 Token Guidance, Congressman Warren Davidson’s (R-OH) public comments when introducing the Bills appeared to express disappointment with existing guidance:
“The lack of regulatory certainty in the U.S., combined with confusing, spasmodic guidance from the SEC, and an inconsistent patchwork of court decisions, has capital and innovation fleeing the U.S. market for the welcoming certainty of other jurisdictions.”