Colorado senators are considering a bill “to study the feasibility of using security token offerings for state capital financing” entitled “Security Token Offerings State Capital Financing.”
A security token offering creates fractional tokens of an underlying asset without selling the asset directly. The bill looks to explore a new method of state capital financing, as noted below.
“Concerning state capital financing managed by the state treasurer, and, in connection therewith, expanding the types of collateral that can be used to secure such financing and making an appropriation.”
Colorado could be the first state to turn to crypto to increase its funding options to reinvest into infrastructure and services.
The Colorado State Treasurer has until March 2023 to present its findings and recommendations. A positive assessment could stimulate future legislation to propose the direct use of Security Tokens for raising state capital.
The bill also sets out guidelines for what will happen if the bill passes. Security Tokens, according to the bill, will ;
- Allow all investors, including retail, to invest
- Reduce State’s reliance on commercial banks
- Reduction in overall state costs
Almost $500 million has been assigned to the feasibility study. This war chest will allow Colorado to dive into Security Tokens to review their potential value thoroughly. As the amendments to the bill have been passed, it will now be taken back to the senate to ratify it into law.