Much of the crypto community was quite pleased with the crypto regulation bill tabled by senators Cynthia Lummis and Kirsten Gillibrand last week. However, a particular subset – especially diehard Bitcoiners – aren’t entirely satisfied with how it treats Bitcoin or altcoins.
Political candidate Mike Cargile believes the bill vastly understated the inherent potential of Bitcoin. By forcing it to be governed by either the SEC or CFTC, he thinks it limits Bitcoin’s potential as a “currency.”
“We do not relegate other currencies to those agencies,” he tweeted Friday. We simply provide an exchange rate with our own national currency.”
Technically, Bitcoin has been deemed legal tender in two countries, making it something of a foreign currency. Even former SEC chairman Jay Clayton referred to it as such in 2019. However, the bill only allows for Bitcoin transactions to be exempt from capital gains taxes up to $200, hurting its tradability.
By regulating Bitcoin under the CFTC, Cargile believes the bill hands control to “ the very people responsible for the deterioration of our own currency.” Indeed, despite rate hikes, U.S. CPI clocked an all-new 40-year annual high on Friday at 8.6%.
While supportive of much of the bill, another Bitcoiner is opposed to the senators’ treatment of the crypto market’s runner-up asset.
“It’s a real shame that Senators Gillibrand and Lummis are attempting to give Ethereum a pass,” tweeted Cory Klippsten, founder of Swan Bitcoin, on Wednesday. The CEO’s company allows users to purchase and be paid in Bitcoin – but not to sell it. Unlike most exchanges, it also does not offer trading for any other cryptos.
Klippsten asserts that Ethereum was a “security” when it launched and is only growing more centralized with time.
The senators’ bill gave specific criteria for what classifies a cryptocurrency as a security, commodity, or “ancillary asset”. While not specifically naming any assets within the text of the bill the politicians clarified later that they believe Ether is a “commodity.” Moreover, both the CFTC and SEC chairmen reportedly agree with them – even though the latter has previously argued that Ether is a security.
“It would have been a security if the Howey Test had been applied [in 2015] and if the SEC was actually looking at the space back then,” argued Klippsten in CNBC interview when the bill was published.
The Howey Test is a decades-old standard for determining whether an asset is a security. The criteria laid therein require that it involve an investment within a common enterprise, with an expectation of profits based on the efforts of others.
Ethereum featured a presale during its initial token allocation, and its development was heavily dependent on the Ethereum Foundation when it spawned.
However, William Hinman of the SEC made a personal argument in 2018 that Ethereum has grown to exhibit a “decentralized structure.” Therefore, Ether transactions no longer appear to be securities transactions, in his view.
Longtime Bitcoin bull and OG Max Keiser had perhaps the fiercest words for Cynthia Lummis after her bill was published.
“Only Bitcoin is *not* a security,” he tweeted in response on Wednesday. “The other 20,000 shitcoins, per the Howey Test, are unregistered securities trading on unlicensed casinos.”
Keiser moved to El Salvador following Nayib Bukele’s adoption of Bitcoin as legal tender. He has personally held multiple meetings with the president and was the first to propose the idea for the nation’s Bitcoin bonds.
The former TV anchor has never been welcoming to altcoins. He blasted the senators’ classification of Ether as “fully decentralized” as “atrocious.”
Keiser resumed his criticisms in conversation with CryptoPotato, saying the Lummis bill is “dumb” and has “a few fatal flaws.” He called it “political junk” merely attempting to attract lobbyist money from the crypto industry.
He also claimed that it shows a complete misunderstanding of securities law, the SEC, the CFTC, and BItcoin.
“Lummis concocted a witches’ brew of inane drivel that makes no sense and will drive the US backward and further away from a Bitcoin standard,” he concluded.
Contrarily, Lummis and Gillibrand claimed to have reviewed every case application of the Howey Test before while they drafted the bill.