By Mark S. Nelson, J.D. A bill introduced by Reps. Warren Davidson (R-Ohio) and Darren Soto (D-Fla) would attempt to add clarity to the securities and tax treatment of digital tokens. Under the Token Taxonomy Act (H.R. 7356), a “digital token” would be excluded from the definition of security and an exemption from the Securities Act registration requirement would apply when a developer or seller of a digital token that has been notified by the SEC that it has run afoul of federal securities rules stops sales and returns sale proceeds. The bill also would clarify broker-dealer custodial rules and the tax treatment of digital tokens. The following analysis is based on a version of the bill text posted on SCRIBD and linked to from a press release issued by Reps. Davidson and Soto. Clarify use of Howey test. Representatives Davidson and Soto said in a press release that the genesis for the bill was a desire to clarify the use of the Howey test for when an offering is an…
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