Senator Kirsten Gillibrand – co-author of the landmark crypto regulation bill revealed yesterday – claims that both the SEC and CFTC chairmen agree on Bitcoin and Ether’s status as commodities. However, both she and Senator Cynthia Lummis also agree that most other cryptocurrencies are securities.
Ethereum in the Clear
Senators Gillibrand and Lummis discussed their bill with Washington Post Live on Thursday. They broke down their criteria for defining a digital asset as a commodity, security, or the newly introduced “ancillary asset”.
As Lummis explained, ancillary assets could include non-fungible tokens, or digital assets that are not either stores of value or means of payment.
Securities, on the other hand, would be defined using criteria established by the Howey Test in the 1930s, with further specifications. Tokens considered securities could include those that confer “voting rights,” “dividend payments,” or “profit/revenue share,” on their holders, among other things.
Gillibrand said that their bill would empower both the SEC and CFTC to govern the crypto market. While the SEC would likely be responsible for overseeing most cryptos, the “lion’s share” of the crypto market would fall under the CFTC, including Bitcoin and Ethereum.
“If you’re like Bitcoin, and creating a proof of work or a proof of stake type of token, you may well be a commodity,” explained Gillibrand.
The senators clarified that while chairman Gensler has not read their bill yet, both he and the CFTC Chairman agree on their Bitcoin and Ethereum classifications.
“Bitcoin and Ether would be certainly commodities – and that’s agreed upon by Chairman Gensler, as well as the chairman of the CFTC.”
The reveal may be surprising given Gary Gensler’s hesitancy to clear Ether’s status as a commodity in the past. In fact, while teaching a blockchain-focused course in 2018, Gensler said that he thought Ether passed the Howey Test when first launched.
Lummis was also asked about the political divide that currently plagues Bitcoin. Indeed, the progressive wing of the senate, including senate banking committee members like Elizabeth Warren and Sherrod Brown appear most skeptical of the asset and industry.
Meanwhile, the three senators that are known to own Bitcoin personally – Pat Toomey, Cynthia Lummis, and Ted Cruz – are all Republican.
The same pattern has emerged within the SEC itself. Democrat members like chairman Gensler have frequently leaned toward more cautious market protection, while the Republican “crypto mom” Hester Pierce wishes to approve a Bitcoin spot ETF.
As a Democrat, Kirsten Gillibrand argued that progressives can find more to love in crypto by recognizing their ability to democratize financial access. She also claims cryptocurrency can support immigrant communities by allowing for instant and cheap remittance payments.