According to the report from Cleveland, U.S. Rep. Warren Davidson of Ohio plans to introduce a common federal regulation to deal with Initial Coin Offerings (ICOs) and cryptocurrencies. While speaking at the Blockchain Solutions conference, Davidson said that it is time we bring a new legislation in place to tackle the crypto issue.
Currently, there’s a lot of uncertainty surrounding regulatory measures for cryptocurrencies. Due to the absence of countrywide regulations, each state regulator classifies tokens in a different way and under different jurisdictions.
Moreover, different regulatory bodies handle crypto regulations differently as per their framework. For e.g. the Securities and Exchange Commission (SEC) says that most of the digital currencies are securities. On the other hand, the Commodity Futures Trading Commission (CFTC) classifies them as commodities.
The CFTC believes that Bitcoin shows resemblance with Gold, instead of securities or currencies, since it doesn’t have liabilities attached to it and is not backed by any particular government. At the same time, the Financial Crimes Enforcement Network (FINCEN) which looks after KYC standards and AML rules considers cryptocurrency as money. On the other hand tax authorities like the IRS seeks cryptocurrency as property which means that profits derived from selling digital assets should be subjected to capital gains tax.
Davidson said that the bipartisan bill would consider creating an “asset class” for the digital tokens. He says that it “would prevent them from being classified as securities, but would also allow the federal government to regulate initial coin offerings more effectively.”
SEC Launched the FinHub for companies seeking to launch ICOs
Due to the ongoing uncertainty of treating ICO tokens as securities, the SEC announced the Strategic Hub for Innovation and Financial Technology (FinHub) to interact with crypto entrepreneurs and companies to help them easily navigate through the legal implications of digital currencies.
Head of FinHub, Valerie Szczepanik said: “By launching FinHub, we hope to provide a clear path for entrepreneurs, developers and their advisers to engage with SEC staff, seek input and test ideas”.
SEC Chairman Jay Clayton said: “The FinHub provides a central point of focus for our efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute our mission”.