U.S. Senators Gillibrand and Lummis Say Most Altcoins Are Securities

Senators Kirsten Gillibrand and Cyntia Lummis argued that under their proposed new legislation, most altcoins would likely be considered securities, but confirmed that bitcoin and ethereum would be classified as commodities.

Both Lummis and Gillibrand agreed with SEC Chairman Gary Gensler’s assessment that most cryptocurrencies are securities under the Howey Test, Gillibrand said:

“Most cryptocurrencies have come under the jurisdiction of the US SEC... Bitcoin and Ethereum are definitely commodities, that’s already agreed. Both SEC Chairman Gensler and CFTC Chairman agree on this.”

Gillibrand pushed back on reports that described the legislation as making the CFTC the primary regulator. "I don't think the CFTC is the primary regulator," she said. "They're just obliged to regulate bitcoin and ethereum, which are the main cryptocurrencies right now."

The pair spoke at a Washington Post event on June 8, a day after unveiling details of the Responsible Financial Innovation Act.

The event was also attended by Commodity Futures Trading Commission (CTFC) Chairman Rostin Behnam, who took a slightly different view on the proportion of altcoins as securities. While there are "probably hundreds" of cryptocurrencies that replicate security tokens, there are also many commodity currencies, such as bitcoin and ethereum, that should be regulated by the CFTC, he said.

“It’s clear that many digital assets themselves replicate or look like commodities. They are more like stores of value than securities.”

Tony Tuths, head of KPMG Tax's digital assets team, told Cointelegraph that in its current form, the legislation is unlikely to "move forward" for the foreseeable future, adding that it is unclear which currencies will end up with the SEC and Jurisdiction of the CTFC.

The new bipartisan bill is expected to rely heavily on the Howey test to determine whether a particular cryptocurrency is classified as a security or a commodity.

“We’re trying to fit the digital asset world into our current regulatory framework. We’ve spent a lot of time defining the modern Howey test,” Senator Lummis said in an interview with CNBC on June 7.

The Howey test is a framework developed by the U.S. Supreme Court to determine whether a transaction qualifies as an investment contract to be considered a security.

The Howey test has become the focus of the U.S. SEC v. Ripple case, which began in December 2020. The U.S. SEC accused the company of using its digital token XRP to raise funds in 2013, and that XRP was an unregistered security at the time. Token.