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Two members of the U.S. Congress are introducing a new bill that will give some much-needed regulatory clarity to the crypto space. The Token Taxonomy Act will assert that a digital token shouldn't be classed as a security.
The bill is a partisan effort from an Ohio Republican Congressman, Warren Davidson, and Darren Soto, a Democrat representing Florida. It will propose that the 72 year-old definition of what a security is should no longer be relevant to the classification and regulation of digital tokens.
According to Davidson, 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."
The SEC has generally ruled that securities are anything that involves an investment contract, where "a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party." However, cryptos are different due to the fact that the platforms can also be developed and built upon in order to add value. They are also often traded without an intermediary.
While it isn't the sole issue affecting crypto regulation, the question of what is and what isn't a security is a major talking point. Earlier in the year, a comment made by a SEC member about the status of Bitcoin (BTC) and Ether (ETH) as commodities and not securities led to a significant price rally.
Read more: US Congressman appreciates SEC official who stated that ether not a security; 'SEC has a tough job, but clearly XRP is not a security' Brad Garlinghouse says