A new bill that recognizes utility tokens and exempts them from state securities has been signed by Steve Bullock, governor of the US state of Montana.
House bill 584, titled “Generally Revise Laws Relating to Cryptocurrency,” was initiated by State Representative Shane Morigeau and had its first reading in February of this year. It was signed by governor Bullock on May 8 and will go into effect on July 1.
Under the new bill, utility tokens are defined as a digital unit that is created and recorded on a blockchain and can be exchanged without an intermediary or custodian, and issued to allow the holder of the digital unit access to a good or service delivered by the issuer without vesting the holder with any ownership interest or equity interest in the issuer.
According to the bill, a utility token transaction has to meet a set of requirements. Any token has to be “primarily consumptive” and their trading based on speculation or investment purpose have to be checked. The bill states that utility tokens should only be used to provide or receive goods, services or content, and issuers must not market the token for speculative or investment reasons.
While utility tokens are now exempted from state securities law, the issuer of the utility token are still required to file a notice of intent to sell utility tokens with the securities commissioner in a form prescribed by the commissioner.
Montana is not the first US state to legalize cryptocurrencies. In January of this year, the state of Wyoming passed a bill recognizing cryptocurrencies as money, and in March, the state of Colorado passed the “Colorado Digital Token Act,” which provides limited exemptions from the securities registration and securities broker-dealer and salesperson licensing requirements for persons dealing in cryptocurrencies.
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