Popular gold bug and crypto-critic Peter Schiff called out Michael Saylor for his continual advocacy of Bitcoin on Monday.
He suggested that the executive chairman of MicroStrategy ought to face charges from the Securities and Exchange Commission (SEC) for his actions.
Pumping Crypto Securities
Schiff’s comments were a response to the SEC’s reveal of charges against the American celebrity Kim Kardashian on Monday. Kardashian agreed to pay nearly $1.3 million for failing to disclose her paid promotion of the crypto token EthereumMax over Instragram.
Given the sizable penalty against the model, Schiff followed up by questioning why similar charges haven’t been levied against Michael Saylor. The billionaire regularly tweets positive statements about Bitcoin over Twitter, while making regular media appearances to advocate its adoption.
“Saylor had much more to gain pumping crypto than Kim,” said the economist. He also called out CNBC for “pumping Bitcoin non-stop” and profiting millions from crypto company ads.
Michael Saylor responded less than 2 hours later to defend his actions. Like many respondents, he pointed out that Bitcoin is a commodity, rather than a security. Therefore, the ethics and legality of promoting it are of a different nature.
“Advocating a commodity is similar to promoting steel, aluminum, concrete, glass, or granite,” said the chairman. “The BTC network is an open protocol, offering utilitarian benefits similar to roads, rails, radio, telephone, television, internet, or English.”
In June, SEC chairman Gary Gensler confirmed publicly that he views Bitcoin as a commodity. His word helped clear any doubt that Bitcoin might be bogged down by excess regulation – but other cryptos are still on Gensler’s radar.
Schiff Disagress With SEC
Despite Saylor’s claims, Schiff disagreed with the SEC’s assessment of Bitcoin.
“Bitcoin has none of the characteristics of an actual commodity,” he said. “I understand the required disclosure distinctions. But I also understand fraud.”
A security is a financial instrument that implies some kind of debt obligation from one party to another. The United States uses the Howey Test to determine what assets are securities. Under the test, an asset qualifies if it is issued by a common enterprise, with an expectation of profit based on the efforts of others.
Bitcoin differs from a standard security as it was not issued by a centralized party. Every unit of the currency was freely available to be mined since its inception. However, Gensler has noted that cryptocurrencies using proof of stake mechanisms may come closer to passing the test.
Schiff also defended his own advocacy of gold, claiming that he has no impact on its price, nor does he sell his personal holdings. However, MicroStrategy has also repeatedly stated that it does not sell, nor plan to sell, its Bitcoin.