2019 Preview: Token Taxonomy & More

What's in store for 2019 with the new modernization of securities law, and how this will promote for a new year of building & wealth creation

2019 is going to be an interesting year. The polarization of wealth has been quite a roller coaster since 2017. The ICO market has created liquidity for some, prison sentences for others, and overall uncertainty for many.

A quote that comes to mind is “steal a little and they throw you in jail, steal alot and they make you king” (Bob Dylan, Sweetheart like you)

What is the Token Taxonomy Act

This new bipartisan bill proposed by Reps. R-Ohio, Darren Soto and Warren Davidson, D-Fla proposes that certain digital currencies that have a more mature network will not be subject to securities laws as previously scrutinized throughout this year.

Why is this important?

This now provides a reformed view of both the Securities Act of 1933 and the Securities Exchange Act of 1934 which defines what a security is.

As noted in Coingape :

  • “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.”

    This makes many question if the concerns and regulatory issues that ICOs caused in the last ~18 months will now be more lax in the coming year thus opening more doors for liquidity, speculation, and more opportunities for fraud. This most likely doesn’t mean that ICOs will now go unregulated, but it could mean that there is a need to update the 72 year old laws which are now becoming irrelevant in today’s digital and real time ecosystem. This type of bill would have been helpful to some of the recent allegations and trials that occured with the likes of Airfox and Paragon.

    How this is similar to the internet

  • According to altcoinbuzz:

    “In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space,” -Warren Davidson”

    “Friday, December 21st will be the last day, this year, that Congress is in session, thus the bill proposal was mostly symbolic, but still a huge deal. Congress will return to session in January 2019 where the bill will have to be reintroduced.

    “These decentralized networks don’t fit neatly within the existing regulatory structure…This is a step forward in finding the right way to regulate them…It shows that there’s momentum on both sides…There’s interest among bipartisan members, and lays the groundwork for the next Congress.” Kristin Smith, Head of the Blockchain Association”

    Signals and predictions for an exciting 2019

    As I noted in my past post, this only lays the groundwork for upcoming things like Bakkt that will have a platform that settles bitcoin futures in January 2019, and it would not be a surprise if Nasdaq will also enable bitcoin futures shortly thereafter. A few additional ones will be as follows.

(1) Records are now becoming digitized.
(2) Despite the sentiment people, technology teams, and legislators will have to support building

(3) Fundraising will continuously be a challenge in the current landscape and environment, but will open pathways to gain confidence across the communities. As we all know, some of the best technologies were built in a recession and downturn. Here;s the top 5 that flourshed in bad times
  • Lego

  • Groupon

  • Amazon

  • Netflix

  • Dominoes

(4) Despite the sentiment: people, technology teams, and legislators will have to support building the infrastructure
  • There will be more opportunities for the infrastructure plays similar to the early days of the internet

  • The apps will still also be needed once the infrastructure is in place to support network effects

(5) More asset classes and platforms will allow and enable tokenization
  • This will support both fractional ownership and liquidity

  • Security tokens will support more of this in a compliant way

(6) Hybrid deployments will be seen to grow involving the joint use of permissionless and permissioned blockchain networks that are interoperable with each other

(7) Gaming and other communities will open up a new era of digital collectibles that will increase in value based on scarcity

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Finally, a word about Genesis Block Holdings:

Genesis Block Holdings is a blockchain venture capital firm, crypto quant hedge fund, and mining company focused on investing in blockchain projects within the ecosystem. We are laser focused on bringing the power of capital, network, and expertise to frontier technology teams to solve the world’s biggest problems

Under no circumstances should any material on this web site be considered as an offer to sell or a solicitation of any offer to buy an interest, token or coin in any individual company or investment fund. Any such offer or solicitation will be separately made only by means of the Confidential Private Offering Memorandum relating to the particular fund or persons who, among other requirements, meet certain qualifications under U.S. federal or other international securities laws and generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments.