Cardano co-founder Charles Hoskinson blasted U.S. regulators on Monday for labeling ADA and other cryptocurrencies as unregistered securities while giving bitcoin (BTC) a “complete pass” from the same level of scrutiny.
According to the developer, Bitcoin could easily meet the legal criteria of an investment contract due to the “overly broad” nature of securities laws.
How the SEC Defines a Security
During a Monday livestream, one of Hoskinson’s viewers asked him to “talk about the SEC” – one of two chief U.S. market regulators behind a downpour of enforcement actions against the crypto industry this year. “Everything is a security right now, according to the SEC,” replied Hoskinson.
Gary Gensler – chairman of the Securities and Exchange Commission (SEC) – has repeatedly suggested that the vast majority of cryptocurrencies besides bitcoin are securities. This creates legal hurdles for firms trying to do business with other coins, based on legal interpretations that many in the industry do not see as valid.
“They would say Bitcoin and Ethereum were a security, if they could get away with it,” Hoskinson told viewers. “Baseball cards could be securities if they really wanted them to be.”
When identifying securities, the SEC follows the “Howey Test,” which requires that an asset involve an investment of money in a common enterprise, with an expectation of profits based on the efforts of others.
Gensler said earlier this year that non-Bitcoin cryptocurrencies almost certainly have a central group of entrepreneurs backing them, meeting securities criteria in a way that Bitcoin doesn’t.
“At the most basic level, they are trying to promote their tokens and entice investors,” he told Intelligencer in an interview.
Hoskinson’s Argument
Hoskinson, however, says Bitcoin is centralized in other ways. “If you subpoena an attack on about three different entities, you could perform a 51% attack on Bitcoin because that’s the way the hash power works,” he claimed.
The coin’s investors also largely share an “expectation of returns” said Hoskinson, referring to them as “orange-pill moon boys.”
“Explain to me the fucking difference between Bitcoin and Ethereum and Cardano and the rest of the gang,” he continued. “Run the goddamn Howey Test on it.”
Hoskinson supports U.S. Congress drafting new legislation to pass “clear rules” for crypto so that the industry will stop being a major target for regulators.
Three of crypto’s largest exchange platforms – Binance, Coinbase, and Kraken – are currently being sued by the SEC for securities violations.
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