The “Token Taxonomy Act of 2018” was introduced by Reps. Warren Davidson (R) and Darren Soto (D) and seeks to exclude digital currencies from being defined as securities by amending the Securities Act of 1933 and the Securities Act of 1934. The bill especially calls to:
“… direct the Securities and Exchange Commission to enact certain regulatory changes regarding digital units secured through public key cryptography, to adjust taxation of virtual currencies held in individual retirement accounts, to create a tax exemption for exchanges of one virtual currency for an-other, to create a de minimis exemption from taxation for gains realized from the sale or exchange of virtual currency for other than cash, and for other purposes.”
The document further defines that the Secretary of the Treasury should issue regulations providing information for returns on transactions in digital currency for which gain or loss is recognized.
Davidson announced plans to introduce legislation to create an “asset class” for cryptocurrencies and digital assets in the beginning of December. He stated that the law “would prevent them from being classified as securities, but would also allow the federal government to regulate initial coin offerings more effectively.”
The bill follows a Congressional “crypto roundtable” held by Davidson in September. Over 45 representatives from major Wall Street firms and crypto companies told lawmakers that there is a pronounced lack of regulatory clarity for initial coin offerings (ICOs) and digital currencies, while some participants argued that current regulations were not only vague, but outdated.
Later in November, Davidson announced plans to introduce a bill that would allow ICOs to “sidestep” U.S. securities laws and propose that ICOs be treated as products rather than as securities at the federal and state level.