This is Why Colorado Signed the Pro-Blockchain Digital Token Act
That the crypto wave is sweeping across the US is true. From presidential candidates from both sides of the divide supporting cryptocurrencies and accepting Bitcoin or ETH donations, tthe once demonized coin now stands to be in held in the same breath as the USD. Well, after a disastrous Non-Farm Payment Roll came in at just 20,000 crashing expectations of 180,000, something has to be done—quickly. A slowdown in job creation points to a weakness in the overall economy but there is an open window where blockchain and crypto provide endless opportunities.
To that end, Colorado is following the Wyoming route and with the ever vibrant, pro-blockchain Governor Jared Polis signing the Digital Token Act on the Friday of Mar 8, he heralded a new era where blockchains are free to roll their products aware that they are except from the state’s security laws unless otherwise.
Similarly, liquidity creators as crypto broker dealers and salespersons need not to be licensed under limited circumstances. The question now is, why is the state taking such a drastic and news grabbing decision? Is Jared seeing an unexploited opportunity that places his state ahead of the pack? From what we can glean, the decision was taken after the state’s general assembly determination.
Reason for Signing the Digital Token Act
After extensive commenting and deliberation, the state find that:
Crypto-economic systems operating off decentralized platforms form an important component of the blockchain technology. In turn, blockchain as a technology has the potential to create the web 3.0 which obviously has several advantages over existing internet systems.
Because of the advantages of blockchain and crypto-economic systems, Colorado is increasingly becoming a hub for blockchain companies. As a result, there is need to open up funding channels for these projects and the fastest way of doing that is to reduce consumptive regulatory requirement under Article 51.
Since the advantages of restricted market investment are many and outweighs the “costs and complexities of state securities registration”, there is need to eliminate regulatory uncertainty especially for Colorado businesses keen on utilizing blockchain and issue utility tokens.
“hereby promoting the formation and growth of local companies and the accompanying job creation and helping make Colorado a hub for companies that are building new forms of decentralized “web 3.0″platforms and applications.”
Applicable Rules for Exemption
However, there are rules for exemption, clear for token issuers. They include:
The issuer must file a notice of intent with the SEC
Token must be a utility, used for consumptive purposes
The token must not be marketed in any way or used for speculation
The token must be rolled out and find use within six months after initial sale or transfer
Buyers must provide proof that they are buying the tokens for use and not for speculation
Initial buyers must not transfer the token until after 180 days have elapsed
The act will be enforceable beginning August 2 and it is clear that not only is the Governor keen on creating new jobs but wants to create a blockchain hub out of Colorado where investors can legally invest in crypto projects. It also came as a surprise because not long ago, the SEC filed 12 cases against blockchain projects after the ICO Task Force determined that they fraudulently raised funds.