A cryptocurrency bill was recently released by senators in the United States, namely Kirsten Gillibrand and Cynthia Lummis. The purpose of the bill is to regulate the crypto space in the country. According to Senator Gillibrand, the two regulatory authorities in the US, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) are both in the agreement of the fact that Bitcoin, as well as Ether, are commodities.
The commodity status of BTC and ETH
The contents of the bill were discussed by the two senators who introduced it. The lawmakers have been working on this piece of legislation for quite some time and they stated that there are clear factors that can distinguish between digital assets that are classified as ‘ancillary assets’ and those that are commodities.
According to Senator Lummis, non-fungible tokens (NFTs) fall in the category of ancillary assets, as those the crypto assets that are not considered a store of value, or a payment mode. Assets that meet the criteria outlined in the Howey Test are classified as securities. This means that tokens that grant the holders with voting rights and make them eligible for dividend payments are considered securities.
Moreover, these tokens also give holders a share of the revenues and profits, along with other business-related functions. According to Senator Gillibrand, the new bill would grant both the SEC and the CFTC the authority of regulating the crypto market. While most of the cryptocurrencies would fall under the jurisdiction of the SEC, the CFTC would regulate the largest share of the market, including leading crypto assets like Bitcoin and Ethereum.
Gillibrand said that a token using the proof of work, or proof of stake model, such as Bitcoin, would be considered a commodity. The two senators disclosed that while the chairman of the SEC, Gary Gensler, had not yet reviewed the bill, he and the chairman of the CFTC were in agreement that the two leading crypto assets in the market are in fact commodities.
But, it should be noted that Gensler has only referred to Bitcoin as a commodity previously. He has hesitated in adding other cryptocurrencies to this list, like Ether. Back in 2018, he had said in a lecture that Ether cleared the Howey test, which means it cannot be a commodity.
Republican and Democrat views on BTC
There are different views about BTC in terms of politics. Republican senators are mostly in favor of Bitcoin, including Cynthia Lummis, Ted Cruz and Pat Toomey. However, Democrats have been quite skeptical where the crypto market is concerned. Gillibrand is indeed a Democrat, but believes that the crypto industry can provide the financial sector with democracy and this makes it important.
Regardless of their views, the political parties are in agreement that crypto requires regulation because there are risks involved and investor protection is a must. This has become a big concern of late, especially with the uncertainty in the crypto market recently and the implosion of the TerraUSDstablecoin.