A lawmaker in California has introduced a bill, proposing an exemption of a narrow set of digital currencies from the state’s corporate security categorization.
Introduced in the California Assembly on Tuesday, the bill was moved as an amendment to legislation first submitted by Majority Leader Ian Calderon (D-57) in February.
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The bill proposed the exemption of digital assets, which are “presumptively not an investment contract” from the definition of security.
“Existing law, the Corporate Securities Law of 1968, provides for the regulation of the issuance of corporate securities, requires the qualification of an offer or sale of securities, and provides for exemptions from qualification with the Commissioner of Business Oversight,” the bill explained.
“Existing law defines a “security” to mean a note, stock, and, among other things, an investment contract. This bill would create an exception from the above definition by providing that a digital asset meeting specified criteria is presumptively not an investment contract within the meaning of a “security.” The bill would allow that presumption to be rebutted upon good cause shown by clear and convincing evidence by the Commissioner of Business Oversight, as specified.”
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It specified that the set criteria fall for any digital asset obtained in exchange for payments in fiat or digital currencies.
The categorization also extends to digital assets which are “used on a fully operational network and the purpose of the asset is for a consumptive purpose, such as the access or consumption of goods, services, data, or the performance of useful functions other than as a medium of exchange or store of value.”
Many regulators and lawmakers in the US, and also globally, are debating properly categorizing digital currencies – whether they fall under securities or not.
While Bitcoin and Ethereum are seen as commodities by the US regulators, XRP, another major digital currency, is facing multiple lawsuits for the allegation of violating securities laws.