Blockchains go to Congress. Members of the US House of Representatives may soon consider legislation that would amend decades-old securities law to account for blockchain-based digital assets. The industry has been waiting a while for this kind of regulatory clarity—and particularly the answer to the question: "Are all ICO tokens really securities?"
Representative Darren Soto of Florida has revealed to The Information (subscription required) that he's developing a new bill that would create three categories of crypto-tokens. One regulatory agency would be assigned to each bucket. In theory, this would simplify the picture; at the moment it's not clear in some cases whether a token should be legally considered a commodity, like Bitcoin is, or a security, a category that includes stocks and bonds. That can lead to confusion over which federal agency, for example the Securities and Exchange Commission (SEC) versus the Commodity Futures Trading Commission (CTFC), has the authority to make cryptocurrency-specific rules.
The bill's three categories? Digital security, digital commodity, and digital token. Digital assets that transparently represent stocks, bonds, and other investment vehicles regulated by the SEC—the type of "tokenized securities" that Overstock.com's tZero and others plan to help investors trade—would go in the first category. Bitcoin would belong in the second one, likely along with Ether, which the SEC seems to have deemed not a security. The third bucket, meanwhile, is where things get complicated. Just ask Kik, the startup that recently revealed that it will fight the SEC in court should the agency charge it with selling unregistered securities.
According to The Information, Soto's bill will draw from one that was introduced in December, near the end of Congress's previous session. That bill laid out the criteria for exempting certain tokens from security status: their blockchain platform must be live when the sale happens, no one person or entity can control the supply or alter transactions, and the tokens can't represent financial interest in a company. If passed, this could open the door to a new kind of regulated digital asset in the US, something like what the government of Switzerland has called a "utility token." It might also reinvigorate the industry. It's not clear, however, if or when Congress will actually take up the bill.
An anonymously created, Harry Potter-themed cryptocurrency is more than just a fun story. One of the hottest items of conversation in the cryptocurrency world is a new blockchain system called MimbleWimble, and a new coin, called Grin, that runs on it. MimbleWimble emerged more than two years ago from Bitcoin research circles. Like Bitcoin, Grin has a mysterious backstory featuring an anonymous creator (two of them, actually). Unlike Bitcoin, it hides the identifying information associated with transactions, keeping them private. At least, that's the promise. Check out my story.
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Loose Change
Fill your pockets with these newsy tidbits.
- Iran's central bank plans to reverse a blanket ban on cryptocurrencies, but will leave in place a prohibition on using them as a means of payment. The move could be a precursor to launching a national digital currency. (Al Jazeera)
- The central banks of Saudi Arabia and the United Arab Emirates have launched a trial using a common digital currency for cross-border payments. (CoinDesk)
- Fidelity Investments is said to be aiming to launch its service for securely storing big investors' bitcoins in March. (Bloomberg)
- Wrapped BTC, a new Ethereum-based token whose value is backed one-to-one with Bitcoin, is now live. (CoinDesk)
