“Most cryptocurrencies get into the SEC. […] Bitcoin and Ethereum will certainly be commodities, and this is agreed,” said US Senator Kirsten Gillibrand.
US Senators Kirsten Gillibrand and Cynthia Lummis believe that most altcoins are likely to qualify as securities under their new legislation, but they have confirmed that Bitcoin (BTC) and Ether (ETH) will be classified as commodities.
Lummis and Gillibrand agreed with the US chairman’s assessment. The Securities and Exchange Commission, Gary Gensler, has acknowledged that most cryptocurrencies are securities that have passed the Howey test, and Gillibrand stated:
“Most cryptocurrencies go to the SEC […] Bitcoin and Ethereum will certainly be commodities, and this is agreed upon. This was agreed with Chairman Gensler and Chairman of the CFTC.”
Gillibrand rebutted reports in which the legislation characterized the Commodity Futures Trading Commission as the primary regulator. “I don’t think the CFTC is the main regulator,” she said. “Your only responsibility is to regulate bitcoin and ether, most cryptocurrencies today.”
The couple made the comments during a Washington Post event on Wednesday, a day after details of the Responsible Financial Innovation Act were released.
Rostin Behnam, Chairman of the CTFC, was also present and expressed a slightly different view on the proportion of altcoins that are securities. He said that while there are “probably hundreds” of coins copying safecoins, there are also many commodity coins such as BTC and ETH that should be regulated by the CFTC.
“It is very clear that many digital assets themselves reproduce or look like commodities. They are more of a store of value than securities.”
Tony Toots, head of digital assets at KPMG US, told Cointelegraph that the legislation as it stands is unlikely to “move forward” anytime soon, adding that it’s not clear which coins will eventually be covered by the legislation. , CTFC.
“From a regulatory standpoint, the legislation requires the CFTC to be the primary regulator, but then highlights a wide range of tokens that have similar characteristics to SEC-regulated securities. It will be difficult to decipher exactly what is in the SEC bucket, but this could be the exception that swallows the rule.”
Related: Class action lawsuit against Coinbase over unregulated securities sale
The new bipartisan bill is expected to rely heavily on the Howey test to determine whether a given coin is a security or a commodity.
“We are trying to simply fit the world of digital assets into our current regulatory framework. […] We spent a lot of time defining the modern Howie test,” Sen. Lummis said in an interview with CNBC on Tuesday in June.
The Howey test is a system established by the US Supreme Court to determine whether a transaction qualifies as an investment contract and therefore is considered a security.
The Howey Test became the focus of an SEC case against Ripple that began in December 2020 and alleges that the company used its XRP digital token to raise funds in 2013 and was an unregistered security token at the time.