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SEC
Policy

New Bipartisan Bill Would Classify Digital Tokens as Commodities, Not Securities, in US

A bill introduced by Rep. Tom Emmer could clarify the status of digital tokens issued as part of a securities offering under securities law.

By Sandali Handagama
AccessTimeIconSep 24, 2020 at 8:49 p.m. UTC
Updated Sep 14, 2021 at 10:00 a.m. UTC
Rep. Tom Emmer
Rep. Tom Emmer
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A new bipartisan-backed bill aims to clarify investment contract assets or digital tokens sold as part of a securities offering are separate and distinct commodities, not securities. 

  • The legislation introduced by Chairman of the National Republican Congressional Committee Rep. Tom Emmer (R-Minn.) would amend existing securities laws to exclude tokens from the definition of a security.
  • Speaking to CoinDesk, Amy Davine Kim, chief policy officer for the Chamber of Digital Commerce (CDC), noted if a company issues a token, and there is an investment contract there, it has to register with the Securities and Exchange Commission (SEC) to qualify for an exemption.
  • The token that's the object or the subject of that investment contract itself isn't necessarily a security, Kim said.
  • According to a press statement on Emmer’s website, the bill would allow companies in compliance with securities registration requirements or have qualified for an exemption to “distribute their assets to the public without additional regulatory uncertainty.”
  • It goes on to state that digital tokens associated with security offerings “are in fact, and always were, commodities.”
  • The bill has bipartisan support, Kim said, adding that the bill would make law a legal standard argument made in an amicus brief submitted by the CDC following the SEC injunction against messaging app Telegram, in which Telegram was accused of violating securities law when it issued its native gram token in 2018.  
  • The new legislation would help to bring clarity to this area of the industry that's in desperate need of it, Kim said.
  • Rep. Michael Conaway (R-Texas), who joined Emmer in introducing the legislation, proposed a separate bill Thursday that could bring digital currency exchanges under a single federal framework. 

Read the full draft of the bill below: 

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