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The State of Montana has become the recent U.S. state to recognize utility tokens, exempting them from being considered as securities under the local rules.
Under the new bill, entitled "Generally Revise Laws Relating to Cryptocurrency," a utility token transaction has to meet a set of requirements. For instance, it sets out that virtual token transactions are permitted granting that they serve a “consumptive purpose,” which means to “provide or receive goods, services, or content including access to good, services, or content.” The issuer must not market the token for speculative or investment reasons.
Also called the Montana House Bill 584, the new law mandates that utility tokens for the consumptive purpose should be available within 180 days after the time of sale or transfer. Moreover, the initial buyer is not allowed to resell or transfer the token until the consumptive purpose is available.
The latest act defines utility token as a digital unit that is made, recorded on a blockchain, capable of being exchanged or transferred without a third party, and issued to allow owners to access goods or services delivered by the issuer “without vesting the holder with any ownership interest or equity interest in the issuer.”
However, although utility tokens are now exempted from state securities law, the token issuers are still required to interact with securities commissioner and file a notice of intent to issue, purchase, or sell such tokens.
The new bill was introduced by Rep. Shane Morigeau and was signed by the Governor of Montana Steve Bullock on May 08. It will go into effect on July 01, 2019.
Montana follows in the path of Wyoming by passing the new bill. Two blockchain-related bills on tokenization and issues with compliance have been passed in Wyoming last February 19. House Bill 185 relates to the storing of so-called certificate tokens representing stocks on a blockchain and permitting their digital transfer, while House Bill 74 aims to make special purpose depository institutions to serve businesses.
