Ethereum is ‘obviously’ a security

MicroStrategy CEO and Bitcoin (BTC) bull Michael Saylor said that Ethereum (ETH) is ‘obviously’ a security as he doubled down on labeling BTC as the only commodity in the crypto sector.

In an interview with Altcoin Daily, Saylor was questioned on his take regarding the classification of both BTC and ETH as commodities by U.S. Senators such as Kirsten Gillibrand and Cynthia Lummis, along with figureheads from the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).

Saylor provided a lengthy run down on what he thou are the fundamental differences between the Bitcoin and Ethereum networks, as he suggested that only the former has remained unchanged over the years:

“I think Ethereum is a security, I think it’s pretty obvious, […] it was issued by an ICO, theres a management team, there was a pre-mine, there’s a hard fork, there’s continual hard forks, there’s a difficulty bomb that keeps getting pushed back.”

The CEO argued that the constant need for software upgrades on a network driven by a team or entity represents an indicator that ETH is a security. He pointed to the design of the long-delayed difficulty bomb, which he said will “murder” the entire ETH mining industry as examples of such.

According to Saylor, for a digital asset to be classified as a commodity, it needs to be backed by a “completely decentralized protocol where nobody can change it even if they wanted to change it.”

“For it to be a commodity there can’t be an issuer, and the truth is you can’t really make decisions. I mean one of the fundamental insights in the crypto industry is that the fact that you can change it, is what makes it a security,” he said.

Securities are generally understood as fungible and tradable financial instruments that are used to raise capital in public or private markets. While commodities are seen as goods or assets that have a monetary utility. Assets like gold and silver are seen as hard commodities, while soft commodities are goods such as rice or tea.

Saylor reiterated that BTC is a commodity as the core of the Bitcoin network cannot be altered, much like the physical makeup of gold:

“If you want to establish yourself as a digital commodity, then you’re trying to create something like gold in cyberspace.”

Despite Saylor’s arguments, however, the Bitcoin network has seen multiple network upgrades over the years. The most notable one in recent history was the Taproot soft fork from November 2021, which aimed to improve Bitcoin’s scripting capabilities and privacy.

Asked about his thoughts on other altcoins such as Cardano’s native token ADA, Saylor once again echoed his maximalist sentiments, stating:

“I think all of the proof-of-stake networks are securities and they’re all very risky […] it’s above my pay grade, the regulators will decide whether or not they allow them to continue or nor noth they don’t allow them to continue.”

Related: Bitcoin ‘cheap’ at $20K as BTC price to wallet ratio mimics 2013

The MicroStrategy went on to note that one of the major reasons he favors BTC over all other crypto assets is that he holds concerns over altcoins being non-compliant security tokens that could get regulated out of existence.

Saylor’s MicroStrategy has continued to snap up BTC despite the tanking value of the asset in 2022, and as of June 29, the firm held 129,699 BTC worth around $3.98 billion at the time.