Cardano Co-Founder Criticizes U.S. Regulators for Unequal Treatment of Cryptocurrencies
Charles Hoskinson, co-founder of Cardano, expressed his frustration with U.S. regulators for categorizing ADA and other cryptocurrencies as unregistered securities while giving Bitcoin a pass. He argued that Bitcoin could meet the legal definition of an investment contract due to the broad nature of securities laws.
The SEC’s Definition of a Security
Hoskinson addressed the Securities and Exchange Commission (SEC) during a livestream, criticizing their stance on cryptocurrencies. He stated that according to the SEC, “everything is a security right now.” The SEC chairman, Gary Gensler, has repeatedly claimed that most cryptocurrencies, excluding Bitcoin, are securities. This interpretation poses challenges for companies looking to engage with non-Bitcoin coins.
Hoskinson suggested that if the SEC could, they would label Bitcoin and Ethereum as securities too. He compared it to considering baseball cards as securities if they wanted to.
The SEC determines whether an asset is a security using the “Howey Test,” which examines whether there is an investment of money in a common enterprise with an expectation of profits from the efforts of others. Gensler believes that non-Bitcoin cryptocurrencies have centralized groups backing them, meeting securities criteria that Bitcoin does not.
Hoskinson’s Counterargument
In response, Hoskinson highlighted ways in which Bitcoin is also centralized. He claimed that by attacking three different entities, one could perform a 51% attack on Bitcoin due to how its hash power works. Additionally, he mentioned that Bitcoin investors have similar expectations of returns.
Hoskinson challenged regulators to apply the Howey Test to Bitcoin and other cryptocurrencies to demonstrate any significant differences.
Hoskinson called for Congress to draft clear rules for the crypto industry, suggesting that this would alleviate the regulatory scrutiny it faces. Currently, three major crypto exchanges, Binance, Coinbase, and Kraken, are being sued by the SEC for securities violations.
Hot Take: Charles Hoskinson Advocates for Fair Regulation of Cryptocurrencies
Charles Hoskinson, co-founder of Cardano, has criticized U.S. regulators for their unequal treatment of cryptocurrencies. He argues that while ADA and other coins are labeled as unregistered securities, Bitcoin receives preferential treatment. Hoskinson suggests that Bitcoin could meet the legal criteria of an investment contract due to the broad nature of securities laws. He challenges regulators to apply the Howey Test to all cryptocurrencies and advocates for Congress to establish clear rules for the industry. This would address regulatory concerns and prevent it from being a major target for enforcement actions. Hoskinson’s criticisms highlight the ongoing debate surrounding the classification and regulation of cryptocurrencies.
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