During a recent interview with Altcoin Regular, MicroStrategy’s CEO Michael Saylor declared Ethereum (ETH) as a security.
Saylor argues that Ethereum's initial distribution through an Initial Coin Offering (ICO) serves as evidence that it should be classified as a security rather than a commodity.
“There's a core team. There was a pre-mine. There's a hard fork. There are ongoing hard forks.”
Saylor further discussed Ethereum's difficulty adjustment mechanism and how it undergoes suspensions every six months, which he contends demonstrates the asset's security status.
If Ethereum's difficulty adjustment were to malfunction, it would discourage miners and mark the network's complete transition to a proof-of-stake system.
In Saylor's opinion, a cryptocurrency can only be considered a commodity if there is no central issuer and no entity making decisions about the network's direction.
Saylor explained,
“When you examine most cryptocurrencies, where they experience hard fork after hard fork, the issue with a hard fork is that changing the protocol means some development team is making a decision. If you can modify the protocol in a material way, you can alter the monetary policy. A hard fork can change the issuance pattern, or it can change the value of something. This makes an asset fall under securities law.”
Saylor contends that Ethereum's ability to be modified is precisely what makes it problematic from a securities law perspective. He suggests that investors want a decentralized protocol like Bitcoin that cannot be altered.
However, Saylor acknowledged that securities have their place in the market, but insisted there should be 'full and transparent disclosures' about these tokens.
Additionally, he referenced the recent filing by the Securities and Exchange Commission (SEC) indicating that cryptocurrencies generating staking yields should be considered securities.
Saylor's statement follows a lawsuit against Solana (SOL) regarding its classification as a security.
Many within the crypto community disagree with this perspective. Several podcasters have noted that even SEC Chair Gary Gensler hasn't explicitly classified Ethereum as a security.
Hosts at CryptosRUs highlighted that even Bitcoin has undergone upgrades, including the SegWit implementation, which partially contributed to the Bitcoin Cash hard fork.
Furthermore, Senators Kirsten Gillibrand and Cynthia Lummis proposed cryptocurrency legislation that specifically classifies both Bitcoin (BTC) and Ethereum as commodities.
