Token Taxonomy Act reintroduced, providing 'sharper legislative language' to congress

Ohio U.S. Representative Warren Davidson has reintroduced the Token Taxonomy Act to congress, a bill which aims to amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude "digital tokens" from the definition of a security. The full bill can be viewed here.

In addition to amending the Securities Act, the bill would also see virtual currencies held in retirement accounts treated in much the same way as bullion for the purposes of taxation. Furthermore, an exchange of one cryptocurrency for another would no longer be considered a taxable event, with crypto to cash transactions under $600 also being tax-exempt.

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The bill was originally introduced in 2018, but never reached a vote during the most recent session of Congress. The newly introduced 2019 TTA largely mirrors last year's submission, with the inclusion preempting state laws in the Securities Act of 1933 to include digital tokens and a widened definition of digital tokens.

"The Token Taxonomy Act clarifies when a digital token is a security and when it is not. It largely mirrors the SEC’s approach to date but creates a sharper line in legislative language that should reduce uncertainty. Coin Center welcomes the introduction of this bill," Coin Center Executive Director Jerry Brito told The Block via email.

While what if any traction the bill gets in Congress remains to be seen, Davidson isn't alone in backing it. U.S. Rep. Darren Soto (D-FL) is also on board, fresh off introducing a bill of his own that would fund an apparatus to go after criminals in crypto. CoinDesk reports that joining Davidson and Soto are Reps. Josh Gottheimer, Tedd Budd, Scott Perry and Tulsi Gabbard, who is seeking the Democratic nomination for president.

About Author

Ryan Todd is a research analyst at The Block where he focuses on the convergence of fintech and digital assets. Previously he worked at Deutsche Bank as an equity analyst covering consumer finance and payments companies, and also spent time at ConsenSys exploring the broader Ethereum ecosystem. Ryan holds a BS in Economics and Accounting/Finance from Florida State University, and MS Finance from Vanderbilt University.