Cryptocurrencies that satisfy the norms of the Digital Token Act, and can transfer ascertainable value via the distributed ledger technology [DLT], will not be classified as a security. Hence, the laws that apply to the latter will not be applied to virtual currencies.
The CIO for the state of Colorado, Theresa Szczurek, stated:
Earlier in 2019, Colorado politicians introduced SB19-023 as an initial step to clarify the regulatory clutter on cryptocurrencies. The state’s lawmakers hope that this act will usher a wave of crypto and blockchain related start-ups that can not only improve the standard of technology within Colorado, but also boost the state’s economy.
The report stated:
“Colorado has become a hub for companies and entrepreneurs that seek to utilize cryptoeconomic systems to power blockchain technology-based business models.”
According to the act, companies in the cryptocurrency space that engage in the issuance, purchase, and sale of digital assets, described as having a “primarily consumptive purpose,” will henceforth not face any regulatory pressure from Article 51.
Furthermore, the findings of the report stated that companies that wanted to “acquire growth capital”, by the sale of digital tokens that have a primarily consumptive purpose will be permitted by the state.
Despite the crypto-positive strides taken by the state, Colorado has not always been a fan of the decentralized currency space. In November 2018, as the bear market peaked, the state’s regulatory body tabled cease-and-desist orders against four initial coin offerings [ICOs] as they violated the state’s finance laws.
In May 2018, due to the mounting crypto-crimes, regulatory authorities in the US and Canada joined forces to crack down on ICO frauds as part of Operation Crypto Sweep. The Colorado November crackdown was presumably part of the operation.
Wyoming is another American state that touts a pro-cryptocurrency stance. In February, state authorities introduced Bill SF 0125 that classified virtual currencies under “property,” greatly reducing the regulatory oversight and allowing users to avail third-party storage services.
However, Ohio is the only state in the US that allows its residents the option to pay their taxes using cryptocurrency. Introduced in November 2018, this system allows only businesses based in Ohio to pay taxes in virtual currencies and not individual taxpayers.