In these times of loud partying, any bill that has visitors on either side of the aisle deserves attention. There is one that is being considered right now that is especially important in the crypto space. On March 8, 2021, actor Warren Davidson introduced HR 1628, Code Classification Act 2021. Sponsored by actors Ted Bode, Darren Soto, Scott Perry and Josh Gotheimer.

Conditions in the Symbol Classification Act 2021
Among other things, the law will exempt “digital codes” from the definition of security and prevent conflicting government rules. Crypto assets must meet certain specific requirements to be considered digital tokens under this Act:

First, the interest must be created either in response to the validation of proposed transactions, or in accordance with establishment rules that cannot be changed by a person or persons under joint control, or as a “first allocation of digital devices that they would otherwise have been created. according to one of the first two options.
Second, assets must have a transaction record registered in a digital ledger or data structure where consensus is achieved through a mathematically verifiable process.
Third, once agreement has been reached, the transaction log must withstand change by any person or persons under joint control.
Fourth, the interest must be transferred in peer-to-peer transactions, and fifth, it cannot be a representation of a traditional economic interest in a company or partnership.
Davidson explained that the purpose of the bill is to improve regulatory clarity. In addition, in an interview, he suggested that if the law had been passed in previous years, “it could have prevented enforcement measures such as the Security and Exchange Commission (SEC) lawsuit against Ripple Labs.” This commentary takes a closer look at how the law can be implemented with respect to certain forms of encryption.

What will the Bitcoin price be?
As almost everyone in the cryptocurrency field knows, bitcoins (BTC) are issued exclusively in mining transactions. In other words, it was created “in response to validation of proposed transactions” to satisfy the first requirement – to be a digital token. In addition, an overview of his transactions is stored on the blockchain, which satisfies the above other requirements.

The whole process is set to withstand changes or changes in the lack of consensus among the large decentralized society. The entire Bitcoin network was built to be peer-to-peer, although there are now many exchanges to facilitate transfers. Finally, Bitcoin is not affiliated with any company or partnership and does not represent any ownership interest or share in the proceeds.

Given these facts, it is clear that Bitcoin will be a digital token. According to the proposed new definition in the law, Bitcoin will thus be excluded from the definition of security. In addition, under section 2 (d) of the Act, the provisions of the State Securities Act on registration or restrictions on the use of an asset are prohibited from applying for bitcoin, provided that states retain the right to regulate and enforce existing acts of fraud. or cheating.

Since the US Securities and Exchange Commission already excludes Bitcoin from federal securities laws, this will not be a change in federal requirements. However, this will create a unified country system where Bitcoin will be excluded from regulation as security, except in cases of fraud.

Will the Ripples XRP become a “digital token”?
However, it is wrong to assume that all cryptocurrencies will be legally regarded as numeric codes. Consider Ripple’s XRP (and pending SEC decisions against the company and its executives). For those unfamiliar with Ripple and XRP, the XRP ledger was completed by Ripple in December 2012, and the computer code identified a stable supply of XRP 100 billion. At launch, 80 billion of these tokens were transferred to Ripple, with the remaining 20 billion XRP to co-founders.

According to the SEC complaint, from 2013 to 2014, Ripple worked to create an XRP marketplace by distributing around 12.5 billion XRP through reward programs that compensated programmers for reporting problems in the XRP registry code. From 2014 to the third quarter of 2020, the company sold approximately 8.8 billion XRP in the market and through institutional sales and raised $ 1.38 billion to finance operations. During this time, there was also resale, including from XRP, which was previously circulated among the founders of the company. So, will XRP be digital and therefore exempt as a guarantee under the law?

Source: CoinTelegraph

LEAVE A REPLY