In an interview on the Altcoin Daily crypto podcast, Bitcoin bull Michael Saylor of Microstrategy said he considers ETH a security.
Michael Saylor – ‘ETH is a Security’
Bitcoin is currently trading around $20,800, and Ethereum at $1,160. Michael Saylor is still buying Bitcoin – Microstrategy now own 129,699 BTC bought at an average price of $30,664.
Saylor is known as a Bitcoin maximalist, famously saying ‘there is no second best crypto’.
Find a transcript of this thoughts on whether ETH is a security below:
‘I think Ethereum’s a security, I think it’s pretty obvious it’s a security. It was issued via an ICO, there’s a management team, there was a pre mine, there’s continual hard forks [Ethereum Classic and others], there’s a difficulty bomb that keeps getting pushed back.
The difficulty bomb is going to wipe out the entire ETH mining industry, it’s going to obliterate it. The fact that someone is able to murder an entire industry, and then they keep changing their mind, and then they keep changing their mind every six months about whether they’re going to do it or not do it, is indicia that it’s a security, and not a commodity.
For ETH to be a commodity, there can’t be an issuer, and you can’t really make decisions – the fact that you can change it makes it a security. If you look at most of these cryptos, where they have hard fork after hard fork, the problem is that changing the protocol means that some development team is making a decision. If you can change the protocol in a material way, you can change the monetary protocol, the issuance pattern, or the value of something – that makes it an investment contract under securities law, and it passes the Howie test.
What you want is a decentralized protocol that can’t be changed. The problem with Ethereum is they keep changing it, from a securities law point of view. Securities have a place in the world, but they need to be sold to the public with a full and fair disclosure.’
Saylor went on to point that out the SEC have stated that if staking rewards (yield) can be generated from a cryptocurrency, it makes it a security. Ethereum has staking (currently as much as 10% of the circulating supply is locked up in ETH 2.0 staking).
Bitcoin, which he compares to a digital commodity version of Gold in cyberspace, can’t be staked (using a proof of work consensus mechanism, not proof of stake).
Saylor also referenced the recent Solend platform vote over whether or not to take control of a Solana whale’s position, and said that ability to vote is proof Solana is a security. The news did break this week that a class action lawsuit has been filed against Solana for violating securities law – alleging that SOL is an unregistered security.
Is Ethereum a Security?
Other crypto podcasters such as George at CryptosRUs have respectfully pushed back on Saylor’s claims. He noted the previous SEC director declared that Ethereum was not a security, and the current SEC director Gary Gensler has not himself commented either way – only saying Bitcoin is a commodity.
However this week United States Senators Kirsten Gillibrand and Cynthia Lummis did state that ‘Bitcoin and Ether would certainly be commodities, and that’s agreed with Chairman Gensler as well as the chairman of the CFTC.’
George also pointed out Bitcoin has had major upgrades such as the SegWit upgrade, and the Bitcoin Cash hard fork was partly in response to that change.
Those upgrades are also voted on by miners – e.g. the Taproot soft fork upgrade was voted on by Bitcoin miners in 2021.
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