Montana recognizes utility tokens and exempts them from securities law

25 May, 2019 | Updated: 25 May, 2019
by Fifi Arisandi
Regulation
Montana recognizes utility tokens and exempts them from securities law

The state of Montana just joined the crypto-friendly states club as it passes a new bill about utility token.

Titled “Generally revise laws relating to cryptocurrency”, the House bill 584 passed with 33-15 and signed by Governor Steve Bullock on May 8th before coming in force on July 1st. 

More details about the passed bill, it defines a utility token as a digital unit that is created, recorded on blockchain, capable of being exchanged without a third party, and issued to enable owners to access a good or service delivered by the issuer “without vesting the holder with any ownership interest or equity interest in the issuer.”

It also elaborates that a utility token transaction has to meet a number of requirements, with the purpose of a token being “primarily consumptive” and that utility tokens should be used to provide or receive goods, services or content, as reported by Cointelegraph.

However, there’s a catch to the acknowledgement, which is using utility tokens for speculative or investment purposes is prohibited.

The following impact of the new law is that utility tokens will be exempted from state securities law, although the issuers are still required to interact with the securities commissioner and file a notice of any intentions to sell such tokens.

This is another good news for US crypto investors. Earlier this year, the state of Wyoming was reported of passing a bill that recognizes cryptos as money, while the state of Colorado passed crypto exemptions to its digital token act, enabling licensing requirements for entities operating with digital tokens.

Change happens one step at a time.

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