US Congress To Introduce Formal Definitions to “Blockchain” and “Digital Token”

As the 116th Congress continues its work in the first session, several new and revived bills have been introduced concerning blockchain and cryptocurrencies. Two of these bills seek to add a formal definition to important terms in the realm of blockchain and cryptocurrencies. Both of these bills has bipartisan support and seeks to add a more formal definition to well-known terms.

The first bill, called the “Blockchain Promotion Act,” was introduced in February and has bipartisan sponsors from both the Senate and the House of Representatives. It calls for the Department of Commerce to create a standard definition of “blockchain.”

In her press release, Congresswoman Doris Matsui (D-CA) said, “Opportunities to deploy blockchain technology range from greatly increased transparency, efficiencies and security in supply chains to more-opportunistically managing next generation broadband networks. This bipartisan, bicameral bill will bring a broad group of stakeholders together to develop a common definition of blockchain, and, perhaps even more importantly, recommend opportunities to leverage the technology to promote new innovations.”

The bill is also sponsored by Rep. Brett Guthrie (R-KY) while Senators Ed Markey (D-MA) and Todd Young (R-ID) introduced a companion version in the Senate.

The second bill, entitled the “Token Taxonomy Act,” was originally introduced in 2018 by Representatives Warren Davidson (R-OH) and Darren Soto (D-FL). The revived bill, re-introduced last week, would amend the Securities Act of 1933 and Securities Exchange Act of 1940 to provide a more distinct definition of cryptocurrencies. One of the most notable changes to the Acts include specifically excluding “digital tokens” from the definition of a security. This means that traditional cryptocurrencies like Bitcoin would fall outside the definition of a security.

Rep. Davidson says that the passage of this bill would “send a powerful message” that “the U.S. is the best destination for blockchain technology.” In addition to Reps. Davidson and Soto, Reps. Josh Gottheimer (D-NJ), Ted Budd (R-NC), Scott Perry (R-PA), and Tulsi Gabbard (D-HI) (who is currently running for President) are all co-sponsors of the bill. All co-sponsors, except Rep. Perry, are members of the House Financial Services Committee.

These bills continue to show Congress’s willingness to engage in blockchain and cryptocurrency regulation. While each of the bills enjoys bipartisan support, some are concerned that the bills could have unintended consequences. It will be important to see how these bills develop as hearings are not expected until the fall at the earliest.