“Most cryptocurrencies get into the SEC. […] Bitcoin and Ethereum will certainly be commodities and there is a consensus on that,” said US Senator Kirsten Gillibrand.
US Senators Kirsten Gillibrand and Cynthia Lummis believe most altcoins will likely qualify as securities under their new legislation, but have confirmed that Bitcoin (BTC) and Ether (ETH) will be classified as commodities.
Lummis and Gillibrand agreed with the assessment of the Chairman of the U.S. Securities and Exchange Commission Gary Gensler acknowledges that most cryptocurrencies are securities that have passed the Howey test, with Gillibrand stating:
“Most cryptocurrencies go to the SEC […] Bitcoin and Ethereum will certainly be commodities and there is a consensus on that. This is agreed with Chairman Gensler and also with the Chairman of the CFTC.”
Gillibrand denied reports that the legislation characterizes the Commodity Futures Trading Commission as the primary regulator. “I don’t think the CFTC is the main regulator,” she said. “They only have an obligation 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 unveiled.
Rostin Benham, Chairman of the CTFC, also attended the event and offered a slightly different view on the proportion of altcoins that are securities. He said that while there are “probably hundreds” of coins replicating Safecoins, there are also many commodity coins like BTC and ETH that should be regulated by the CFTC.
“It is quite clear that many digital assets reproduce themselves or look like commodities. They are more of a store of value than stocks.”
Tony Toots, Head of Digital Assets at KPMG US, told Cointelegraph that the legislation as it stands is unlikely to “move forward” any time soon, adding that it’s not clear which coins will ultimately fall within the scope of the law would. SEC vs. CTFC.
“From a regulatory perspective, the legislation requires the CFTC to be the primary regulator, but then assigns a wide range of tokens with characteristics similar to securities to SEC regulation. It will be difficult to decipher exactly what is in the SEC basket, but this could be the exception that swallows the rule.”
Related: Class-action lawsuit against Coinbase alleges sale of securities is unregulated
The new bipartisan bill is expected to rely heavily on the Howey test to determine whether a given coin qualifies as a security or a commodity.
“We’re just trying to fit the world of digital assets into our current regulatory framework. […] We spent a lot of time defining the modern Howey test,” Senator Lummis said Tuesday during a June interview with CNBC.
The Howey Test is a system established by the US Supreme Court to determine whether a transaction qualifies as an investment contract and therefore qualifies as collateral.
The Howey test became the centerpiece of the SEC case against Ripple, which began in December 2020 and claimed the company used its XRP digital token to raise funds in 2013 and was an unregistered security token at the time.