The growing diversity of cryptocurrencies, such as the difference between payment and utility tokens, is slowly yet certainly becoming more apparent to the general public, making it easier for cryptocurrency operations to take place according to the way that they were meant to do so by their originators.
It is a very positive thing, and the way that these operations are being discerned through multiple avenues only goes on to establish different use cases for cryptocurrencies in various avenues.
In a move that would only make the operations for one such segment easier, the Wyoming House of Representatives recently approved a bill that would allow some utility tokens to be exempt from regulations applied to securities.
What is the bill about?
The bill seeks to provide relief to the operations of utility tokens that sometimes still have to go through the same regulations as security or payment tokens despite not fulfilling such operations by themselves.
For instance, any utility token that is not sold as an investment instrument cannot be regarded as a security by its technical definition, but in some cases, it still has to go through the same securities regulations for tokens that serve dual functions.
Through this bill, utility tokens that do not serve as an investment but are traded for something would be exempt to securities regulations.
The bill introduces set criteria that have to be met by these utility tokens to avail the exemptions. It also provides further exemptions, such as those from broker-dealer classifications, which once again can be availed if said requirements are met by these tokens.
However, it was specified that organizations such as credit unions or banks would not be able to seek exemptions from the additional criteria.
The bill will now be presented to the Senate; if and when it is passed through the Senate and then through the governor’s office, it will be effective from July 1.
Another cryptocurrency related bill is in the works
Another bill, which focuses on the exemption of cryptocurrencies from being taxed as property, will be on the House floor soon.
When passed, the bill will classify cryptocurrencies as a “store of value, medium or exchange” which is not recognized as legal tender by the government.
It remains to be seen how that bill will fare on the House floor, as the tax exemption provided through it could be of significant value, and it would not be easy for the government representatives to allow it.
It depends on how the bill is presented and if it provides any eventual alternatives for replacement of cryptocurrency’s classification as property for tax purposes.
How viable are both of these bills?
While the bill regarding utility tokens will certainly make the operations easier for such tokens, it will be difficult for tax authorities to levy taxes if the bill regarding exemption of property tax gets passed.
Both bills serve different purposes, but at the end of the day, one seems to be more viable to be passed while the other seems a bit farfetched.