As the highly anticipated deadline for the approval of a Bitcoin (BTC) exchange-traded fund (ETF) looms, the crypto community on X (formerly Twitter) finds itself engaged in a debate regarding the classification of BTC as a security.
Despite regulatory bodies categorizing the largest cryptocurrency as a commodity, Securities and Exchange Commission (SEC) Chair Gary Gensler’s comments have once again sparked discussions on whether BTC should be considered a security.
On February 27, Chair Gensler commented on the state of the cryptocurrency market, suggesting that “everything but Bitcoin” should be regarded as a security within the nascent crypto industry.
These remarks have triggered Ripple Chief Technology Officer (CTO) David Schwartz to counter a claim made by a Bitcoin maximalist, asserting that Bitcoin cannot be classified as a security.
Battle Over Bitcoin’s Security Status
The debate emerged when BTC maximalist Bruce Fenton responded to an update in the BlackRock IShares S-1 filing, expressing concerns that the SEC could potentially view Bitcoin as a security.
Fenton stated that he would personally fight such a classification in court, arguing that Bitcoin is code freely distributed and protected as speech, referencing the EFF case Bernstein vs. Department of Justice (DOJ). Fenton claimed:
If the SEC ever attempts to say that Bitcoin is a security I will personally fight this in court and I will win. Bitcoin is code given away for free and the EFF case Bernstein vs DOJ says code is speech. Speech is protected in the USA.
In response to Fenton’s assertion, Ripple CTO Schwartz offered his perspective, stating:
This is fundamentally no different from arguing that books are speech and therefore the government can’t prohibit me from beating you with a book.
Ripple CTO Weighs In On Government’s Regulatory Authority
Schwartz elaborated on the concept, highlighting that code, like everything else, qualifies as speech only when it communicates ideas to individuals. However, code ceases to be speech when it serves other functions.
Schwartz emphasized that the government has the authority to ban functional outcomes it deems undesirable, even if achieved through means considered speech in other contexts.
Ripple’s CTO further claimed that if expressive speech is significantly burdened, individuals can challenge such regulations on an as-applied basis.
The ongoing debate regarding Bitcoin’s classification as a security adds a layer of complexity to the decision-making process surrounding the approval of a Bitcoin ETF.
However, suppose the SEC adheres to the chair’s perspective on the classification of BTC. In that case, this ongoing debate should not serve as a hindrance or an excuse to impede the approval of applications that have the potential to bolster Bitcoin’s price and enable a substantial influx of investors into the industry.
As the deadline approaches, market participants and enthusiasts eagerly await the SEC’s decision, which will undoubtedly significantly impact the future of BTC and the broader crypto industry.
At the time of writing, Bitcoin (BTC) is trading at $44,000, showing a 5% upward trend over the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com