We recently reported, what might be the rise of a cryptocurrency war between the U.S. and China. Previously in Oct. 2018, Ripple Lab’s chief strategist, Cory Johnson, was quoted saying in a wide-ranging interview with crypto-focused magazine Breaker that U.S. administration is interested in Ripple and is their choice to fight back Chinese dominance over Bitcoin.
What is “Token Taxonomy Act of 2018”?
In short “Token Taxonomy Act” is a bipartisan bill proposed by Reps. R-Ohio, Darren Soto and Warren Davidson, D-Fla. — defines a “digital token” and specifies that securities laws would not apply to cryptocurrencies like Bitcoin and Ethereum once they become a fully functioning network.
So in a nutshell, if passed this bill will be an update to past Securities Act of 1933 and the Securities Exchange Act of 1934, which define the currently used structure for what “security” is.
If the bill passes:
- The digital tokens would likely fall under the purview of the Federal Trade Commission or the CFTC.
- IRS would have to adjust taxation of virtual currencies, create a tax exemption for exchanges of one virtual currency for another and to create a de minimis exemption from taxation for gains realized from the sale or exchange of virtual currency.
- SEC is already clamping down ICOs considering them as securities but exempted bitcoin & ethereum as not securities due to their decentralized nature. So, it will essentially open doors for other cryptocurrencies and not categorized as securities.
What are the chances of “Token Taxonomy Act of 2018” is passed?
China is, by far, the undisputed world leader in bitcoin mining — with Chinese mining pools controlling more than 70% of the bitcoin network’s collective hash rate, the measuring unit of the processing power of the bitcoin network.
While China’s dominance is fairly visible, the United States doesn’t want to stay behind in this race. According to the reports coming in from the White House, it appears U.S. president Donald Trump’s White House is also worrying about China’s bitcoin dominance and Ripple Labs executive, are suggesting the U.S. administration is interested in ripple (XRP) adoption to offset China’s bitcoin strength.
Ripple Lab’s chief strategist, Cory Johnson, was quoted saying in a wide-ranging interview with crypto-focused magazine Breaker that,
The White House, in particular, seems to be thinking about what it means to have 80% of bitcoin mining taking place in China and a majority of ether mining taking place in China,”
“When you look at XRP, there is no mining, so from a foreign-control aspect or from an environmental aspect, XRP is a very different beast. And in conversations we’ve had with the administration, they seem to get that and think that might matter.
Amidst these growing tensions between U.S. & China, there is actually a fair chance that this bill might get a green signal from Congress.
Please don’t forget to let us know your views on this bill in the comments below.
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Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com