Washington, D.C. - Today, Congressman Tom Emmer (MN-06) introduced the bipartisan Securities Clarity Act with Reps. Darren Soto and Ro Khanna to provide a clear definition of assets like digital tokens and other emerging technologies under current securities laws. The measure utilizes a technology-neutral approach to remain adaptable to future innovations.
Congressman Emmer’s legislation provides a solution for individuals who have complied with existing securities registration requirements, or who have qualified for an exemption but, after meeting these requirements, innovative entrepreneurs may distribute their asset to the public without fear of additional regulatory burdens. These assets are in fact, and always were, commodities.
Upon introduction, Congressman Emmer said, “There has been an unreasonable approach by regulators as to how federal securities laws should be applied to transactions involving the sale of blockchain-based tokens, and this lack of clarity is hurting American innovation. Between regulation by enforcement and the varying legal decisions regarding the classification of these assets, regulatory uncertainty has hindered the growth of blockchain technology, leaving many to take the technology overseas,”
The legislation solidifies the status of any asset sold as the object of an “investment contract,” a term with more than 75 years of jurisprudence, by proposing a new definition: “investment contract asset.”
The Securities Clarity Act states that an investment contract asset (for example, a digital token) is separate and distinct from the securities offering that it may have been a part of. The approach is technology-neutral, and applies equally to all assets offered and sold, whether tangible or digital. This new defined term would refer to any asset sold as part of an investment contract that would not be considered a “security” but for its sale as part of an investment contract.
"We have seen lack of clear regulations hinder the progress of blockchain-based technologies. The development of these innovations should not be impacted by government’s inability to adjust,” concluded Congressman Emmer. “The Securities Clarity Act will allow America to compete in this new arena without sacrificing the consumer and investor protections that have made our capital markets the strongest in the world. American companies have already tried to follow our current rules and navigate our securities regulations. Now, they deserve certainty from our regulators when offering their digital asset to the public. This is a bipartisan solution, that could provide long lasting growth in innovation in our country."
“Blockchain technology is allowing innovative ideas to be developed quickly, further contributing to our nation’s economic growth,” said Congressman Darren Soto. “As Congress works to protect those who invest in this technology, the Securities Clarity Act will add critical definition and jurisdiction to create certainty for a strong digital asset market in the United States. This is an important first-step in promoting innovation and maximizing the potential of virtual currencies for the U.S. economy, all while protecting customers and the financial well-being of investors," said Congressman Soto.
"Establishing a predictable legal environment for tokens is one of the most pressing issues facing the digital asset marketplace today. This important legislation would provide much needed certainty for investors, consumers, and businesses by reaffirming the difference between an investment contract and digital assets sold or transferred under the terms of an investment contract. The Chamber of Digital Commerce commends Congressmen Emmer, Soto and Khanna for introducing The Securities Clarity Act, which will make the U.S. more competitive for the blockchain technology industry,” said Perianne Boring, Founder and President of the Chamber of Digital Commerce.
"As interest in digital assets grows, it is becoming increasingly important to have clear rules of the road so that companies can offer products that consumers want while maintaining consumer protections. The Blockchain Association would like to thank Representatives Emmer, Soto, and Khanna for their continued work to do just that. The Securities Clarity Act would go a long way towards providing regulatory clarity for the securities treatment of digital assets and we are proud to support its reintroduction," said Kristin Smith, Executive Director of the Blockchain Association.
This bill is endorsed by the Chamber of Digital Commerce, the Blockchain Association, and Coin Center.
Read the Securities Clarity Act here.
Congressman Emmer formerly served as the Ranking Member of the House Financial Services Committee’s Task Force on Financial Technology during the 117th Congress. In addition, Congressman Emmer became Co-Chair of the Congressional Blockchain Caucus in 2018. He now serves as the Ranking Member of the Subcommittee on Oversight and Investigations for the House Financial Services Committee. Read more here.