U.S. Congressman Tom Emmer introduced a new bill to clarify the classification of digital assets and specify the jurisdiction of each regulator.
The bill essentially amends the securities laws to include “investment contracts asset.”
“The Securities Clarity Act inserts a key term, the “investment contract asset,” into existing securities law to enable crypto projects to reach their full potential in a compliant way, allowing the United States to compete globally in this next iteration of the internet.”
In a May 18 Twitter thread, Emmer explained the need for distinction between digital assets and securities contracts. According to the lawmaker, if there is no distinction between the asset and the securities contract, token projects that raise capital to fund development cannot move out of the securities framework once the project is decentralized.
If passed, the bill would provide more regulatory clarity on the kind of assets that can be labeled as securities. Under Gary Gensler, the SEC has classified several crypto projects as securities, saying they meet the definition of the term under the Howey Test because of the presence of an “investment contract.”
U.S. laws define an investment contract as a transaction where an individual invests his money in a common enterprise with the expectation of profit from the efforts of a third party.
Meanwhile, several crypto projects have consistently maintained that the current Securities Act was inadequate to cater to the need of the industry.
Crypto community supports bill
Several crypto community stakeholders, including organizations like the Coin Center, Chamber of Digital Commerce, Crypto Council for Innovation, and Blockchain Association, have thrown their weight behind the bill.
Pro-crypto lawyer Jake Chervinsky said:
“There’s a crucial difference in securities law between a digital asset on the one hand and an investment contract by which a digital asset is sold on the other. Since the SEC fails to grasp that difference, a bill like this is necessary.”
Meanwhile, this is not the first time U.S. lawmakers have tried to introduce new legislation for the crypto industry. Last year, Sen. Cynthia Lummis and Kirsten Gillibrand introduced a bipartisan crypto bill to the Senate.
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