Jared Polis, the Governor of Colorado, has signed a cryptocurrency-friendly bill exempting digital tokens from state securities laws — if their primary purpose is as a “consumptive.”
Colorado Digital Token Act
In November, Bitcoinist reported that US Representative Jared Polis, who is a known cryptocurrency and blockchain advocate, became Colorado’s Governor.
On March 6, Theresa Szczurek said that Polis has signed Colorado’s Digital Token Act. The act is supposed to enter into effect on Aug 2, 2019, and it aims to cement the state’s position as a “hub for companies and entrepreneurs that seek to utilize cryptoeconomic systems to power blockchain technology-based business models.”
The bill outlines the uncertainties companies face when buying, selling, and even issuing their own cryptocurrencies. It also exempts certain digital tokens from state securities regulations.
Exciting day for #blockchain technology. @GovofCO @jaredpolis signed the #Digital Token Act today with key legislators, Attorney General @pweiser, and #Colorado cabinet members Patty Salazar with @DORAColorado, @BetsyMarkey with OEDIT, and @TheresaSzczurek of @OITColorado. pic.twitter.com/erOEloEdpy
— TheresaSzczurek (@TheresaSzczurek) March 7, 2019
Exemptions Based on Purpose
Colorado’s Digital Token Act will effectively exempt cryptocurrencies from state securities laws if “the primary purpose of the digital token is a consumptive purpose.”
Additionally, the law is clearly addressing the ICO fundraising model. It stipulates that tokens issued through a crowdfunding campaign of the kind will be exempt from securities regulations if:
The issuer of the digital token markets the digital token to be used for a consumptive purpose and does not market the digital token to be used for a speculative or investment purpose.
Therefore, digital tokens will be subjected to securities regulations if they are used for “speculative or investment purposes.”
The law also outlines how exemptions will be granted. Per the document, each issuer of a digital token shall file a notice of intent with the securities commissioner before he can qualify for an exemption.