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11 tweets,
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1/ UGH--HOPES DASHED! #tokentaxonomyact proposes 2 great things but the rest of it needs a lot of work. The $600 tax exemption & 1031 (like-for-like) exchange provisions are great. I wish the bill stopped there! The definition of "digital token" got so watered down that there's..
2/ ...not even a "taxonomy" left in the #tokentaxonomyact anymore! 4 states have now passed similar bills that define a taxonomy (#virtualcurrencies, #utilitytokens & #securitytokens) & bills are moving in 5 more states--that's 9 states in only 15 months! But this bill not only..
3/ ...jettisoned that taxonomy, it now claims federal preemption over those bills. (I think that section is probably unconstitutional. The feds clearly have preemption regarding securities, but digital tokens are expressly not securities! If they're not securities, then they're..
4/ ...property, & state law trumps federal law regarding property. Sorry, I think a few state attorneys general will scoff at being told by Congress that they retain fraud authority...that was never Congress's authority to bequeath to states! Seriously, in the unlikely event...
5/ ...this bill becomes law, I think it will be mired in litigation over these issues...and for what? Why where these issues even injected into a bill that should have simply addressed the tax issues!!! 😩). Now, back to the definition of digital token. IT DOESN'T EVEN ADDRESS...
6/ ...THE THRESHOLD ISSUE, WHICH IS TO NARROW THE OVERLY-BROAD HOWEY "INVESTMENT CONTRACT" APPROACH!! Why should you care? Because the #tokentaxonomyact gives the SEC power to issue notices within 90 days. We already know the SEC sees most #utilitytokens as securities bc they...
7/ ...(the SEC) views #utilitytokens as investment contracts under Howey. This bill leaves that overly-broad definition untouched, but gives the SEC power to send 90-day notices. Gee...how do you think that's going to play out??? 🤔 If I'm the SEC, I send notices to pretty much..
8/ ...every #utilitytoken project. That makes them much worse off--at least today there's the possibility that they're not securities, but if this bill becomes law they'll have crystal clarity that they are. TELL ME HOW THIS HELPS ENTREPRENEURS?!?!?! Sure, it gives much-needed...
9/ ...clarity to entrepreneurs, but in precisely the wrong direction!!! I think the definition of digital token needs serious overhaul--either to add back the consumptive purpose concept (which was entirely struck from early drafts) or to re-define a security to be an interest...
10/ ...in a company, full stop. I really wanted to support the #tokentaxonomyact--& I do support its tax portions--but why muddy those while adding (not reducing) the SEC's power over this industry & picking a federalism fight?? Well-intentioned bill but it needs A LOT of work!!!
11/... @lex_node had a great thread on this topic & I can’t wait to see what he, @PatBerarducci, @awrigh01, @NYcryptolawyer & @MattCorva have to say now that the bill has been introduced. They’ve had great insights in our private conversations & I hope they share publicly! 🤠
