U.S. House Majority Whip Tom Emmer (R-MN) on May 18 introduced bipartisan legislation that would distinguish between the asset and the securities contract so that token projects raising capital to fund development in the early stages can move out of the securities framework once the project is decentralized, ensuring these tokens are used for their utility.
“So long as we lack a clear definition under the law for what is a commodity and what is a security, American innovation will suffer,” Rep. Emmer said
Currently, existing securities law does not distinguish between an asset and the securities contract it may or may not be part of, according to a bill summary provided by the lawmakers.
The congressman introduced the Securities Clarity Act alongside U.S. Rep. Darren Soto (D-FL) to provide a clear regulatory classification of digital assets and to provide market certainty for innovators and clear jurisdictional boundaries for regulators, the summary says.
Specifically, the bill would specify that any asset sold as the object of an investment contract, now defined as an “investment contract asset,” is distinct from the securities offering it was a part of, states the summary, noting that this definition is technology-neutral and would apply to all assets sold or offered that would only be considered a “security” because of their inclusion in an investment contract.
“Entrepreneurs need to be able to accurately calculate risk to create new investment opportunities and grow our economy,” said Rep. Emmer. “The Securities Clarity Act will help provide these answers and allow American investors to fully participate in this exciting technology without sacrificing consumer protections. We need the United States to lead in the next iteration of the internet.”
“Blockchain technology contributes to our nation’s economy by allowing innovation to grow. Congress is working to protect those who invest in this technology with the Securities Clarity Act,” Rep. Soto said. “This bill will add critical definition and jurisdiction to create certainty for a strong digital asset market in the United States. This is an important step in maximizing the potential of virtual currencies for the U.S. economy, all while protecting customers and the financial well-being of investors.”
Coin Center, the Blockchain Association, the Chamber of Digital Commerce, and the Crypto Council for Innovation support the measure.