The Senator Said That the SEC Chairman Believed that Bitcoin and Ethereum Were Commodities
According to Senator Gillibrand, there is a broad regulatory consensus that Ethereum is a commodity. Even Gary Gensler agreed.
Senator Kirsten Gillibrand, the co-author of the landmark cryptocurrency regulation bill disclosed yesterday, claimed that both the SEC and CFTC chairmen agreed on the status of Bitcoin and Ethereum as commodities. However, she and Senator Cynthia Lummis also agreed that most other cryptocurrencies are securities.
Ethereum in the Open
Senators Gillibrand and Lummis discussed their bill live with the Washington Post on Thursday. They broke down their criteria for defining digital assets as commodities, securities or newly introduced “ancillary assets”.
As Lummis explained, ancillary assets can include non forgeable tokens or digital assets that are not a store of value or a means of payment. On the other hand, the definition of securities will use the standards established by Howey test in the 1930s and have further specifications. Tokens that are considered securities may include those that give their holders “voting rights”, “dividend payments” or “share of profits / income”.
Gillibrand said their bill would empower the SEC and CFTC to regulate the cryptocurrency market. Although the US Securities and Exchange Commission may be responsible for supervising most cryptocurrencies, the “big head” of the cryptocurrency market will belong to the US Commodity Exchange Commission, including Bitcoin and Ethereum.
“If you create a token of the type of proof of work or proof of equity, like Bitcoin, you are likely to be a commodity,” Gillibrand explained.
The senators clarified that although chairman Gensler had not read their bill, he and chairman CFTC agreed with their classification of Bitcoin and Ethereum. “Bitcoin and ether will certainly be commodities — this is agreed by Chairman Gensler and chairman CFTC.”
Given Gary Gensler’s past hesitancy to eliminate the status of ether as a commodity, this disclosure may be surprising. In fact, when teaching a course focusing on blockchain in 2018, Gensler said that he thought that Ethereum passed the Howey test when it was first introduced.
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Dealing with Partisanship
Lummis was also asked about the political differences that currently plague Bitcoin. In fact, progressives in the Senate, including members of the Senate Banking Committee such as Elizabeth Warren and Sherrod Brown, seem to be the most skeptical of such assets and industries.
Meanwhile, pat Toomey, Cynthia Lummis and Ted Cruz, three senators who are known to own Bitcoin, are all Republicans. The same pattern has emerged within the sec. Democratic members such as chairman Gensler often prefer more cautious market protection, while Hester Pierce, the Republican “cryptocurrency mother”, hopes to approve a Bitcoin spot ETF.
As a Democrat, Kirsten Gillibrand believes that progressives can find more love in cryptocurrency because they recognize the ability of cryptocurrency to democratize financial channels. She also claimed that cryptocurrency could support immigrant communities by allowing instant and cheap remittance payments.