Securities Clarity Act
This bill excludes an investment contract asset as being considered a security, including for disclosure and registration purposes. An investment contract asset as defined by the bill is a tangible or intangible asset sold pursuant to an investment contract that is not otherwise considered a security.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8378 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 8378
To amend the securities laws to exclude investment contract assets from
the definition of a security.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 24, 2020
Mr. Emmer (for himself, Mr. Conaway, Mr. Soto, and Mr. Khanna)
introduced the following bill; which was referred to the Committee on
Financial Services
_______________________________________________________________________
A BILL
To amend the securities laws to exclude investment contract assets from
the definition of a security.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Securities Clarity Act''.
SEC. 2. SENSE OF CONGRESS; PURPOSE.
(a) Sense of Congress.--It is the sense of Congress that--
(1) among the ways that participants in the digital asset
industry have raised capital and earned revenue is through
arrangements in which investors provide funds for the
development of blockchain-based protocols in exchange for
digital assets or the future delivery of digital assets to be
used in those protocols;
(2) although certain of those fundraising arrangements may
be deemed to be ``investment contracts'' within the meaning
given to that term in section 2(a) of the Securities Act of
1933 (the ``Securities Act''), the underlying assets sold
pursuant to these arrangements are frequently not themselves
inherently securities as defined in section 2(a) of the
Securities Act and, like other assets sold pursuant to
investment contracts in the past, do not become securities as
so defined merely because they are sold pursuant to an
investment contract;
(3) under SEC v. W.J. Howey Co., 328 U.S. 293 (1946), and
its progeny, the Federal courts have consistently held that
``an investment contract, for purposes of the Securities Act,
means a contract, transaction, or scheme whereby a person
invests his money in a common enterprise and is led to expect
profits solely from the efforts of the promoter or a third
party'', and have not endorsed the notion that an asset
underlying an investment contract (for example, the orange
groves sold in Howey) is also conferred ``security'' status
merely as a result of its being sold pursuant to the relevant
contract, transaction, or scheme;
(4) although the distinction between an investment
contract, which is a security, and the assets sold pursuant to
it had been well-settled for purposes of section 2(a) of the
Securities Act, the two have been unnecessarily conflated in
the context of digital assets; and
(5) this new approach, which conflates an investment
contract and the asset sold pursuant to that contract or
scheme, differs from the approach taken in many other major
jurisdictions around the world, has discouraged development of
the digital asset sector in the United States, and has hindered
innovation in that industry here without providing concomitant
benefits to those who enter into investment contracts for the
purpose of acquiring digital assets.
(b) Purpose.--The purpose of this Act is to clarify and codify that
an asset sold pursuant to an investment contract, whether tangible or
intangible (including an asset in digital form), that is not otherwise
a security under the Act, does not become a security as a result of
being sold or otherwise transferred pursuant to an investment contract.
SEC. 3. TREATMENT OF INVESTMENT CONTRACT ASSETS.
(a) Securities Act of 1933.--Section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)) is amended--
(1) in paragraph (1), by adding at the end the following:
``The term `security' does not include an investment contract
asset.''; and
(2) by adding at the end the following:
``(20) The term `investment contact asset' means an asset,
whether tangible or intangible, including assets in digital
form--
``(A) sold or otherwise transferred, or intended to
be sold or otherwise transferred, pursuant to an
investment contract; and
``(B) that is not otherwise a security pursuant to
the first sentence of paragraph (1).''.
(b) Investment Advisers Act of 1940.--Section 202(a)(18) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is amended by
adding at the end the following: ``The term `security' does not include
an investment contract asset (as such term is defined under section
2(a) of the Securities Act of 1933).''.
(c) Investment Company Act of 1940.--Section 2(a)(36) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended by
adding at the end the following: ``The term `security' does not include
an investment contract asset (as such term is defined under section
2(a) of the Securities Act of 1933).''.
(d) Securities Exchange Act of 1934.--Section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by
adding at the end the following: ``The term `security' does not include
an investment contract asset (as such term is defined under section
2(a) of the Securities Act of 1933).''.
(e) Securities Investor Protection Act of 1970.--Section 16(14) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
amended by adding at the end the following: ``The term `security' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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