MicroStrategy CEO and bitcoin bull Michael Sayer reaffirmed his belief in Ethereum’s position as a security due to its variability.
he was speaking on Altcoin Daily The YouTube channel, where co-host Aaron Arnold said Senator Cynthia Lumis (R-Wyo), co-sponsor of the Responsible Financial Innovation Act, credits him with helping to define Ethereum as a commodity.
According to the bill, any digital token with sufficient decentralization, a somewhat opaque distinction, should be viewed as a commodity and come under the purview of the Commodities and Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission (SEC). .
an object cannot be changed
The characteristics of a commodity cannot be changed, argues Sayler. Nor can it have an issuer. Gold cannot be converted into steel or aluminum depending on the vote. In contrast, Ethereum’s initial coin offering, management team and hard fork prove that it can be fundamentally changed.
A development team can agree on software changes to be made to the network. Any change to fix a fatal flaw is justified, Saler argues, but changing the code in a way that fundamentally alters the currency’s value or issuance pattern could mean the coin or token. Passes the Howe Test and is subject to securities law.
Securities must be sold subject to full and fair disclosure, including who owns the company and any risk factors.
Todd Phillips, director of financial regulation at the liberal think tank Center for American Progress, agrees. They believe that most cryptocurrencies are securities and therefore need to comply with customary securities laws. He said the Responsible Financial Innovation Act Bill does not impose significant enough disclosure rules for potential investors.
His views agree with that of SEC Chairman Gary Gensler, who has argued on several occasions that cryptocurrencies are securities. The federal agency has cracked down on crypto companies offering yield products without registering as a securities provider.
Sailor slammed crypto exchanges for lacking registration details to provide such companies as unregistered securities and management teams.
Bitcoin is not a security because it doesn’t change, Saylor says
Bitcoin, Saler argues, differs from a security in that there was no initial coin offering, and no one seeks to replace the network’s software. Let’s say you’re relying on the physics of the bitcoin network with its proof-of-stake consensus mechanism. In that case, there is no need to keep upgrading the software.
The Responsible Financial Innovation Act classifies most cryptocurrencies as commodities, placing them under the Commodities and Futures Trading Commission, which regulates bitcoin futures contracts. The bill allows a rebuttal against the notion that a particular token is a security.
Republican Patrick T. McHenry (RN.C.) believes that crypto assets are neither a commodity nor a security and has advocated for a third regulator to manage the space.