Blockchain Legal Resource: Colorado Enacts Digital Token Act

The latest state to confront the utility token issue, Colorado, recently enacted the Digital Token Act (the Act). The Act amends the provisions of the Colorado Securities Act that require the registration of all securities offerings in the state unless an exemption is available. Specifically, the Act provides a conditional exemption from registration for certain utility tokens qualifying as "digital tokens" that have a "consumptive purpose." It also provides limited relief from broker-dealer registration for intermediaries effecting transactions in such digital tokens.

The Act defines a "digital token" as a digital unit that is: (1) created (a) in response to the verification or collection of a specified number of transactions relating to a digital ledger or database; (b) by deploying computer code to a blockchain network that allows for the creation of digital tokens or other units; or (c) using any combination of the methods specified in (a) or (b); (2) recorded in