Sen. Cynthia Lummis (R-WY) has revealed a sweeping U.S. crypto legalization and regulation bill. Her lead advisor for the initiative, MicroStrategy CEO Michael Saylor, believes bitcoin is a commodity, not a security.
The U.S. crypto bill seems to have the support among crypto industry insiders of both Bitcoin maximalists and the Ethereum / DeFi / Web 3.0 wing. And it enjoys bipartisan support with sponsorship by Kirstin Gillibrand (D-NY) and Ted Cruz (R-TX).
What could be the reason for the U.S. crypto bill to classify bitcoin and other cryptocurrencies as commodities instead of securities?
Bitcoin Would Obviously Be Labeled as a Commodity
Because in promoting the bill before its unveiling, Sen. Lummis has said if passed as law, it would make a distinction between commodities, securities, stablecoins, central bank digital currencies, and NFTs.
The fact that there will be a distinction at all between commodities and securities leaves it to bitcoin as the most bearing feature of a commodity.
Bitcoin is most like a commodity in its price fluctuations due to demands for a scarce digital good with global macro price correlations to energy prices and inflation produced by computational rigs running BTC mining software anyone can download.
Other cryptocurrencies, essentially purchases of use/equity tokens that not only can function as a cash payment and banking system, but smart cash with features like incentives for voting rights in a sophisticated, smart contract-enforced blockchain governance that affects their value, are more like publicly traded equity securities in corporate organizations.
But Sen. Lummis’ U.S. crypto bill will treat most cryptocurrencies as commodities.
Saylor Was the “First Set of Eyes” on the Bill
But the real strong indicator that the bill would categorize bitcoin as a commodity is that Sen. Lummis’ lead advisor and the “first set of eyes” was MicroStrategy CEO and advocate for crypto regulatory clarity, Michael Saylor.
Lummis said of Saylor’s help:
“Michael Saylor was one of our first set of eyes on it because his expertise is long-standing and we want to make sure we have lots of input before we file it.”
And in a recent interview on Lex Fridman’s popular tech and science YouTube podcast, MicroStrategy’s CEO was very adamant about distinguishing bitcoin from stocks and even other cryptocurrencies as a commodity. He repeatedly insisted that bitcoin is not the same as a security and explained why.
A security is a vested interest in the equity or financial assets of an organization, like a stock. Bitcoin is not owner’s equity in a specialized company that provides a specific good in a business to generate profits for owners.
It is the final settlement in a deflationary depository currency on the most secure account keeping network ever deployed and devised for that very purpose.
Lobbying Congress on the Crypto Bill
It’s not just the bitcoin maximalists like Michael Saylor who have been in talks with the government about the crypto bill. Ethereum investor Andreesen Horowitz’s crypto general counsel and head of decentralization, Miles Jennings, said of the crypto bill:
“This is the starting point for discussions about what the law should look like. I think that is one of the reasons we’re excited about it.”
So it seems whale-sized leaders in both wings of the crypto industry have been consulted by the legislative offices that crafted this bill.