Colorado Senators File Bill to Exempt Cryptos from Securities Laws

Two Colorado lawmakers have introduced a new bill seeking to exempt some digital tokens from securities laws.

AccessTimeIconJan 7, 2019 at 10:15 a.m. UTC
Updated Sep 13, 2021 at 8:44 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Two lawmakers from the U.S. state of Colorado have introduced legislation seeking to exempt cryptocurrencies and certain digital tokens from securities laws.

On Friday, senators Stephen Fenberg (Democrat) and Jack Tate (Republican) jointly filed a bill dubbed the “Colorado Digital Token Act,” proposing that digital tokens with a "primarily consumptive” purpose should be exempted from securities laws provided they are not marketed for “speculative or investment” purposes.

The move is aimed to remove "regulatory uncertainty" that could hold back firms offering marketplaces for tokens and others aiming to fundraise using crypto assets.

Creating the Colorado Digital Token Act "will enable colorado businesses that use cryptoeconomic systems to obtain growth capital to help grow and expand their businesses, thereby promoting the formation and growth of local companies and the accompanying job creation and helping make colorado a hub for companies that are building new forms of decentralized "Web 3.0" platforms and applications," the proposed bill states.

The consumptive purpose of digital tokens is defined as "to provide or receive goods, services, or content, including access to goods, services, or content," according to the document.

To qualify for exemption, the consumptive purpose for a token must be available within 180 days of its sale or transfer and the initial buyer cannot resell or transfer the token until the consumptive purpose is available.

Further, the bill specifies: “The initial buyer provides a knowing and clear acknowledgment that the initial buyer is purchasing the digital token with the primary intent to use the digital token for a consumptive purpose and not for a speculative or investment purpose.”

For an exemption, an issuer must file a notice of intent with the state's securities commissioner, the bill adds.

In a similar development last month, two members of the U.S. House of Representatives filed the “Token Taxonomy Act,” a proposal also seeking to exclude digital tokens from being defined as securities.

Colorado Capitol image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.