Rep. Dusty Johnson wants to regulate digital assets kind of like corn. South Dakota crypto advocates like the idea.
When a new cryptocurrency sprouts, there’s an opportunity to water it with money—to invest.
It’s not until that digital asset reaches a certain point that it can be harvested and turned into a commodity. That moment is what Johnson’s bill seeks to define.
“Because the answer—it varies, based on how it’s being used," said Johnson.
He said popular digital assets like Bitcoin are "clearly a commodity." But in the beginning stages, digital assets are something more of a security.
“You’re really investing in the future value of that operation," Johnson said. "There are times when digital assets are like that. Then, there are times where they’re just like fungible commodities.”
He said the bill provides a predictable regulatory framework for digital assets.
Digital asset advocates say the bill regulates assets like the European union.
Barry Sackett with the South Dakota Blockchain Institute said when a digital assets tips over into the commodity realm is an important line to draw.
“The thing about digital assets is they can be complex, and they can kind of appear to be more than one thing at the same time," Sackett said. "But, for most of the digital assets that people are currently comfortable with, this will give legislative clarity where up to this point there’s really only been administrative clarity.”
And rules frequently change based on SEC rulings and court rulings.
Sackett said a federal law will bring certainty.
Johnson’s bill passed out of the House financial services committee. It’s now headed to the House floor.