HB 1426, a piece of state legislation that would have created guidelines for identifying “open blockchain tokens” as securities, was voted down in the Colorado state Senate on May 9, according to public records.
The bill passed handily in the state House of Representatives, but was more controversial in the senate. According to the Denver Post, the final hours of the legislative session saw a split in both political parties. Lawmakers initially passed the measure by one vote, but the senate took another vote moments later, and “shot down” the bill 18-17 after some senators switched sides.
Senator Tim Neville (R), who co-sponsored the bill, said he had hoped it would encourage blockchain innovation in the state without having to wait for legal clarity on cryptocurrencies from federal regulators. Following the vote, Neville said:
“We usually come together to create more opportunities for Colorado companies and startups. In this case, this was an epic fail for those who chose not to support it.”
The bill stated that tokens, which are created for utility, such as the cartoon cats in the CryptoKitties blockchain game, would essentially be treated like “collectible stamps.” On the other hand, tokens that are created for financial gain would be treated as securities. The legislative summary says:
“The bill defines ‘open blockchain token’ and exempts certain open blockchain tokens from the definition of ‘security’ for purposes of the ‘Colorado Securities Act’.”