Cynthia Lummis viewed Ether as a commodity in June, but the Merge led her to believe it might meet the standards. Gary Gensler has reiterated that most crypto assets, except for Bitcoin, are securities but agrees that ETH now has security properties.
US Senator Cynthia Lummis, who is at the center of crypto regulation, changed her position about Ether (ETH). The representative for Wyoming recently said she now considers the second-largest cryptocurrency as a security instead of a commodity.
Ether is trading at around USD 1,234 and has accumulated a 0.4% gain over the last 24 hours. While its daily trading volume is above USD 4.45 billion, its market capitalization is about USD 148.70 billion, according to CoinGecko.
Lummis Believes Only Bitcoin Would Qualify as a Commodity
Lummis expressed her different position about Ether during a discussion on measures that could have prevented FTX from collapsing. She thinks the crypto regulatory bill she proposed in June could have done so by clarifying the classification of cryptocurrencies.
The senator commented that Bitcoin seems the only thing that would qualify as a commodity.
Her statement differs from her words in June when she said Ether would be a commodity alongside Bitcoin. However, the shift of Ethereum to a proof-of-stake consensus mechanism led her to believe it might now meet the standards.
Lummis explained that it is likely to be a security due to its inability to withdraw the stake.
The Howey test indicates that a security is an asset a centralized entity issues to raise money. Therefore, investors expect to benefit from the efforts of the entity.
Bitcoin has largely failed the Howey test, causing cryptocurrency advocates and regulators to have long debates. They do not know whether other digital assets are securities, commodities, or a new asset class.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has reiterated that most crypto assets, including stablecoins, are securities. Until now, the US government official has only specified that he views Bitcoin as a commodity.
However, he has also suggested that the Ethereum Merge might have given more security properties to Ether. During that process, the network provided a lockup period in exchange for an expectation of rewards.
Rostin Benham, the chairman of the Commodity Futures Trading Commission (CFTC), may have also adopted the position of Gensler.
Lummis Expresses Her Opinion on the Sam Bankman-Fried Case
The senator for Wyoming predicts that Sam Bankman-Fried, the former CEO of FTX, would hesitate to appear at a congressional hearing. He received an invitation from Maxine Waters, the chairwoman of the House Financial Services Committee, to discuss the collapse of his operations.
Lummis thinks there is a potential liability under civil and criminal statutes for what has happened to the bankrupt cryptocurrency exchange. She explained that the lack of a board of directors, 135 existing companies, and an unclear financial opening suggests fraud.
However, the senator believes Bankman-Fried should move the bankruptcy process forward rather than try to repair his public image before Congress.
By Alexander Salazar