U.S. Senators Kirsten Gillibrand and Cyntia Lummis believe that most altcoin projects will be considered securities under the proposed new legislation. However, they confirmed that Bitcoin (BTC) and Ethereum (ETH) will be classified as commodities. Here are the details…
US Senators believe altcoin projects are in danger
According to Lummis and Gillibrand; Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), will consider most cryptocurrencies as securities under the Howey Test. Gillibrand used the following statements in his statements on the subject:
Most cryptocurrencies go to the SEC […] Bitcoin and Ethereum will definitely be commodities and it has been agreed. The chairman agrees with Gensler and the chairman of the CFTC.
Gillibrand retracted reports stating that legislation had made the Commodity Futures Trading Commission the primary regulator. “I don’t think the CFTC is the primary regulator. “They have obligations to regulate Bitcoin and Ethereum, which are the majority of cryptocurrencies today.” The two made the comments during a Washington Post event on Wednesday, a day after they released the details of the Responsible Financial Innovation Act.
What did the President of CTFC say?
CTFC president Rostin Behnam was also at the event. He took a slightly different view on the proportion of altcoins as securities. He said that while there are “possibly hundreds” of coins copying securities, there are also many commodities such as BTC and ETH that need to be regulated by the CFTC. “It’s pretty clear that many of the digital assets themselves are copied or appear to be meta. They are more like stores of value than securities,” he said.
Tony Tuths, head of the digital assets team at KPMG, said at the moment that legislation “cannot move forward” in the future. On the regulatory side, legislation requires the CFTC to be the primary regulator, according to Tuths. But then it creates a wide array of tokens with similar characteristics to SEC-regulated securities.” Therefore, he cannot predict what will happen under the scope of the SEC. According to experts, the new law will mainly look to the Howey Test to determine the classification of a particular coin as a security or commodity.
As we have reported as Cryptokoin.com, the Howey Test determines whether a transaction qualifies as an investment contract by the US Supreme Court. Thus, experts distinguish between securities and commodities. The Howey Test has become a focal point in the litigation between the SEC and Ripple.
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