Montana is the latest U.S. state to endorse virtual tokens in new legislation that will exempt utility tokens from being considered as securities under the local rules. The law was signed earlier this month by Steve Bullock, governor of Montana.
Bullock signed House Bill 584 that was entitled “Generally revise laws relating to cryptocurrency,” which was sponsored by Shane Morigeau, a Democrat state representative. The law states that utility token transactions are permissible within the state as long as the purpose of the token is “primarily consumptive.”
This bill has implications to the issuer as they are not allowed to market the virtual tokens as an investment or even for speculation purposes. They are also required to file a notice of their intention to sell the tokens with the state’s securities commissioner.
Other restrictions outlined in the bill involve the “consumptive purpose” of the Crypto token which stipulates that the utility token should be available within 180 days after its time of transfer or sale. Also, the initial buyer is prohibited from reselling or transferring the Crypto token until its consumptive purpose has become available.
The bill defines consumptive purpose as the ability to “provide or receive goods, services, or content including access to goods, services, or content.”
The law is another milestone for cryptocurrencies as it represents another step towards clear regulations for digital tokens in the United States. However, it’s important to note that federal rules displace state-level laws, and this means the real-world impact of the bill will only apply to crypto issuances within Montana and its residents.
By passing the bill, Montana follows in the path of Wyoming, a state that has taken the lead towards defining regulations for virtual tokens. Currently, the state has 13 favourable blockchain laws that offer a compressive guideline for crypto firms operating in the state.