Michael Saylor claimed that Ethereum is “obviously” a security

Michael Saylor Ethereum
  • Bitcoin maximalist Michael Saylor explained why Ethereum is a value on the Altcoin Daily podcast.
  • The new Responsible Financial Innovation law classifies cryptocurrencies according to the level of decentralization.
  • Saylor criticized cryptocurrency exchanges for providing what he sees as unregistered securities and management teams of such companies for lacking a registration statement.

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MicroStrategy CEO and Bitcoin maximalist Michael Saylor confirms his belief in Ethereum’s status as a security due to its ability to change.

In a chat on the YouTube channel Altcoin Daily, where co-host Aaron Arnold said that Senator Cynthia Lummis, co-sponsor of the Responsible Financial Innovation Act, credits him with helping define Ethereum’s rating.

The bill intends to classify commodity assets “basic products” and securities “value titles”, review if they have tax obligations, study the case and check their instance, as the Spot digital asset markets could also have tax obligations, they would be the cryptocurrency exchanges.

Under 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).

A commodity cannot be transformed

The characteristic of a commodity is that it cannot be changed, Saylor argues. It also cannot have an issuer. Gold cannot be transformed into steel or aluminum based on a vote.

On the contrary, in the Ethereum Initial Coin Offering (ICO), the management team and the hard forks demonstrate that it can be changed in its fundamentals.

A development team can agree on the software changes that need to be made on the network. Any change to fix a fatal flaw is reasonable, Saylor argues, but changing the code in a way that fundamentally alters the coin’s value or issuance pattern means the coin or token passes the Howey test and is subject to the law. of values.

Securities must be sold subject to full and fair disclosure, including company owner and risk factors.

Todd Phillips, director of financial regulation at the liberal think tank Center for American Progress, agrees. He is of the opinion that most cryptocurrencies are securities and therefore must comply with common securities laws. He said the Responsible Financial Innovation bill does not impose important proper disclosure rules on potential investors.

His views echo those of SEC Chairman Gary Gensler, who has argued on multiple occasions that cryptocurrencies are securities. The federal agency has clamped down on crypto firms that offer performance products without registering as securities providers.

Saylor criticized cryptocurrency exchanges for providing what he considers to be unregistered securities and management teams of such companies for lacking a registration statement.

Bitcoin is not a security because it does not change, says Saylor

Bitcoin, Saylor argues, differs from security in that there was no initial coin offering, nor does anyone want to change the software on the network.

Suppose you trust the physical Bitcoin network with its proof-of-work consensus mechanism. In that case, there is no need to keep updating the software.

Michael Saylor

The Responsible Financial Innovation Act classifies most cryptocurrencies as commodities and places them under the Commodities and Futures Trading Commission, which regulates Bitcoin futures contracts. The bill allows rebuttals against the notion that a particular token is a security.

Republican Patrick T. McHenry believes that crypto assets are not a commodity or security and has advocated for a third qualification to run the space.