A document dated March 6th reveals that the Governor of Colorado, USA, Jared S. Polis, has signed the “Colorado Digital Token Act” with which he would exclude the applicability of the regulations on financial securities for cryptocurrencies, simply put: Crypto are not securities.
The act that was sponsored by the Republican Jack Tate and the Democrat Steve Feinberg and presented for the first time in the Senate of Colorado in January 2019 offers us a new definition of digital tokens, in apparent contrast with the federal laws on the basis of which the SEC states that almost all tokens should be considered as security.
The law embraces a broad perspective by defining cryptocurrencies as “a digital unit … capable of being traded or transferred between persons without an intermediary or custodian of value”.
It exempts tokens from “registration as securities” and also removes “licensing requirements of broker-dealers and sellers“ for persons who issue, operate and process such tokens.
It is clear that this approach is completely in contrast with different interpretations of the SEC but also of the corresponding authorities of other countries (BaFin, Consob, FINMA, etc.) and with authoritative doctrine expressed by various lawyers in Italy and abroad.
And yet, even if the proposed law of Colorado is decidedly courageous and in contrast to the mantra that is proposed to us periodically on the subject, in the attempt to compare in any case a token to a product or a financial instrument, I find myself perfectly in agreement with the bipartisan approach of Tate and Feinberg.
It is, in fact, clear that, by freeing companies involved in developing blockchain technology and new tokens from the complex procedure that they should go through if such tokens are by law attributable to the figure of the financial instrument (or securities), two positive results will be obtained:
- Colorado could become the first country in the United States to “alleviate” the formalities for issuing new tokens, thus becoming a point of reference for many companies and thus attractive for new investments.
- The possibility for many developers to be able to launch blockchain projects independently and without the need for vehicles with high formalities or significant financial resources.
However, there are two particularly sensitive points:
The first relates to the need to protect consumers against potential fraud. Is the US regulatory framework sufficient to protect token buyers if the US Security Act and the US Security Exchange Act do not apply?
Furthermore, the bill may conflict with federal provisions in this regard and therefore not apply outside Colorado, limiting its applicability only to Colorado citizens and Colorado-based companies.
Rhode Island is another state in the United States where senators are currently pushing for measures to exclude the attribution of tokens to securities.
In all this, at the federal level, the will to regulate ICOs has already been announced, but there are still no developments on the subject.
Therefore, it appears obvious, in the opinion of the writer, that also the American scenario, which is improperly considered by many as a solid point of reference from which to take inspiration, is somewhat vague and it would be a good thing for other incautious legislators to study these new legislative measures carefully, since they could open up new markets, excluding the applicability of the financial instrument to the blockchain based token and thus favour the start of new and numerous projects.
In this sense, the Italian Parliament, instead of devoting itself to complex operations for limited uses of the blockchain, could instead seriously address a process of liberalisation of ICOs and STOs from the complex rules of the Consolidated Financial Act and assess a sandbox regulation dedicated to blockchain projects, evaluating whether the rules on the Consumer Code and those of our Criminal Code, together with the rules in favour of Innovative Startups and, in particular, crowdfunding platforms, can actually be sufficient to regulate the matter, while promoting a new Italian and European industrial revolution.