Congress on its way to make an exception for Bitcoin

The US Congress may eventually bring to the Crypto industry what it has long dreamed of: regulatory clarity.

Two congressmen have submitted yesterday a proposal to make an exception to digital currencies from the nearly 70-year-old traditional definition of what is an asset. The legal definition initially seems to be a minor change, but has led to a heated dispute between those in the industry who argue that the legal framework defining digital assets has long been outdated.

T. The Token Taxonomy Act - a two-party deal of congressional Warren Davidson and Darren Soto, which gives a clear definition of "digital tokens" and classifies it as a category to which traditional legal actions can not be applied as a standard asset.

A huge concern for regulators and legislators has always been consumer protection. Many retail investors have speculated deals with Bitcoin and other Crypto currencies in the past year, resulting in huge losses for them after the bubble burst. Bitcoin is down 70% this year, while XRP has lost 85% of its value.

Continued complaints from participants in the crypto markets lead to the idea of ​​applying a 72-year securities law to digital currencies. The Securities and Exchange Commission in the US uses the so-called Howey Test, which was set up in 1946 by the US Supreme Court at a time when a Florida citrus farmer was involved. With this Howey Test, the SEC will determine whether the crypto currencies can be defined as "Securities".

According to the SEC, each transaction that is classified as an "investment contract" is considered to be a financial asset. An investment agreement exists if a person has invested their money in a company and awaits earnings solely from the efforts and results of this company. However, according to experts, these standards should be broken down for digital assets. Many of the crypto currencies are just blockchain software that can be upgraded. It is also possible to trade without an intermediary, which makes them quite different from one share traded on the Nasdaq.

This Friday is likely to be the most likely day for Congress to hold a session last, so the proposal will be re-examined next year. There is an obvious move from both the crypto industry and legislators and Congress, which is something positive about digital currencies.

Source: CNBC

Photo: Pixabay

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