New Californian bill proposes exemption of some cryptos from securities laws

A Californian lawmaker has introduced a bill, which exempts a narrow set of digital currencies from the state’s corporate security classification. Introduced in the California Assembly by Ian Calderon in February, the bill was recently moved as an amendment to the legislation.

The bill proposes the exemption of digital assets that are “presumptively not an investment contract” from the definition of security. An excerpt from the bill reads:

Existing law, the Corporate Securities Law of 1968, provides for the regulation of the issuance of corporate securities, requires the qualification of an offer or sale of securities, and provides for exemptions from qualification with the Commissioner of Business Oversight.

Existing law defines a “security” to mean a note, stock, and, among other things, an investment contract. This bill would create an exception from the above definition by providing that a digital asset meeting specified criteria is presumptively not an investment contract within the meaning of a “security.” The bill would allow that presumption to be rebutted upon good cause shown by clear and convincing evidence by the Commissioner of Business Oversight, as specified.

The categorization also extends to digital assets which are “used on a fully operational network and the purpose of the asset is for a consumptive purpose, such as the access or consumption of goods, services, data, or the performance of useful functions other than as a medium of exchange or store of value.”

Regulators and lawmakers around the world are debating whether digital currencies should be categorized as securities or not. While BTC and ETH are viewed as commodities by the US regulators, XRP is facing lawsuits and is accused of violating securities laws.