‘Epic fail’ blockchain bill derailed at 2018 Colorado Legislative Session

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The Colorado legislators decided to sink a bill that would have exempted some cryptocurrencies from being regulated as securities under the Colorado Securities Act. The bill would have benefited innovation in the state, which has been seen as very friendly to the blockchain and cryptocurrency space. However, Wednesday’s vote put an end to that.

After sailing through the House and Senate, House Bill 1426 skidded to a halt during the last day of the 2018 legislative season after several senators balking and changing their votes, Denver Post reported.

The final vote for the third reading of HB 1426 was 17 votes in favour and 18 against. The chief bone of contention for the bill was the open blockchain token, which was defined as a digital unit capable of being traded or transferred between persons without intermediaries or any custodian of value. The senators who changed their vote were Lucia Guzman and Daniel Kagan after having previously supported the bill. The Attorney General’s opposition to the bill appeared to be an important factor in Guzman’s decision.

Attorney General Cynthia Coffman told Denver Post, “The language in HB14-26 that would have carved out open blockchain tokens from the definition of a security under the Colorado Securities Act was overly broad and vague. The language would have created immunity from criminal liability for someone who commits securities fraud in that context, putting Colorado consumers at risk.”

If the digital currency would not qualify as an open blockchain token, it would have to be classified as a security and would have to be registered as such. The bill was always a risky proposition; however, since current SEC Chairman Jay Clayton was adamant on the fact that no ICO token has yet to meet the regulator’s description of a security.

The failure of the bill’s passage was a bitter pill to swallow for Sen. Tim Neville, a Republican one of the bill’s architects, who described HB 1426 as “an epic fail.”

“We usually come together to create more opportunities for Colorado companies and startups,” Neville was quoted by the news outlet saying. “In this case, this was an epic fail for those who chose not to support it.”