Colorado senators introduce “Digital Token Act” to allow cryptocurrencies to bypass securities laws

Two Colorado senators have filed a bill to introduce a "Digital Token Act", which would allow cryptocurrencies to bypass securities laws

Colorado senators Stephen Fenberg and Jack Tate have filed a bill entitled the “Colorado Digital Token Act,” which could see cryptocurrencies become exempt from securities laws outlined by the SEC and the Colorado Division of Securities (CDS).

The Colorado-based regulator clamped down on four ICOs in November, with Global Pay Net, Credits, Crowdshare Mining, and CyberSmart Coin Invest all being hit with cease and desist orders over fraudulent initial coin offerings.

However, some senators believe that a more relaxed approach would be beneficial in aiding future innovation within Colorado.

Fenburg and Tate’s bill stated: “The bill provides limited exemptions from the securities registration and securities broker-dealer and salesperson licensing requirements for persons dealing in digital tokens. ‘Digital token’ is defined as a digital unit with specified characteristics, secured through a decentralized ledger or database, exchangeable for goods or services and capable of being traded or transferred between persons without an intermediary or custodian of value.”

The bill went on to claim that Colorado “has become a hub for companies and entrepreneurs that seek to utilise crypto-economic systems to power blockchain technology-based business models,” reiterating that tokens would have a “primarily consumptive purpose,” meaning that utility tokens would have less concerns over whether they were in breach of securities law.

However, the United States remains uncertain on cryptocurrencies in general. The SEC has been cracking down on a number of ICOs over the past few months, while a decision on a Bitcoin ETF is expected in late-February.

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