On Friday (October 21), Kristin Smith, who is the Executive Director of Washington, D.C. based Blockchain Association (which represents “the reputable leaders of the US blockchain and cryptocurrency industry”), explained in a recent interview why the Bitcoin price has been so stable over the past few months.

Here is her bio:

Kristin runs the Blockchain Association, where she leads the crypto industry’s development of a strategic roadmap for public policy. She is an experienced policy professional, with senior-level experience in both House and Senate offices as well as private sector experience advocating for companies in the telecommunications, Internet, and other tech-focused industries. Kristin holds an MBA in Finance from NYU’s Stern School of Business and a graduate degree from Georgetown University.

Smith’s comments were made during a conversation she had with Joe Kernen, co-host of CNBC’s “Squawk Box”, at a time when Bitcoin was trading around the $19,000 level.

Source: TradingView

According to a report by The Daily Hodl, Smith said:

I think Bitcoin has been largely stable for a couple of reasons. One, you have the retail investor that has largely exited investing in Bitcoin… People are worried about paying for gas. They’re worried about paying for groceries. They don’t have the ability to put extra money away by investing in Bitcoin at the moment...

But I do think that the investors that are in there right now are holding out for a future date. They’re in it for the long run. And I think as we start to see the economy turn around and people putting more risk into their investment portfolios, we’re going to see the investment in Bitcoin rise and subsequently the price.

On 16 September 2022, Jake Chervinsky, who is one of Smith’s colleagues at Blockchain Association, reacted to Bitcoin maxis, such as Michael Saylor, who are happy that Ethereum’s Merge upgrade may have made $ETH more of a target for the U.S. Securities and Exchange Commission (SEC).

After Ethereum’s Merge upgrade was completed in the early hours of 15 September 2022, several influential Bitcoin maxis expressed their reaction to this event.

Saylor, who is a Bitcoin maxi (i.e. believes that — with the exception of fiat-backed stablecoins such as Tether ($USDT) — Bitcoin is the only legitimate cryptocurrency), sent out a tweet in response to comments by SEC Chair Gary Gensler’s most recent comment on PoS cryptocurrencies that suggested he expects the SEC to eventually declare that $ETH is a security (unlike $BTC which they have publicly called a commodity and therefore not subject to U.S. securities laws).

The Wall Street Journal (WSJ) report that Saylor was referring to in his tweet says that “Ethereum’s big software update on Thursday may have turned the second-largest cryptocurrency into a security” in the eyes of the SEC. According to the WSJ report, although Gensler did not specifically mention Ethereum, he said yesterday that the native assets of PoS blockchains could pass the Howey Test since it was possible to view staking as an “investment contract” because “the investing public is anticipating profits based on the efforts of others.”

Chervinsky, who was General Council at Compound Labs before becoming Executive Vice President and Head of Policy at Blockchain Association, took to Twitter on 16 September 2022 to defend Ethereum’s move to PoS consensus by explaining why despite what some people may think the Merge has not turned $ETH from a commodity to a security.

He went on to say:

The general idea seems to be ‘if you squint hard enough, staking sort of looks like a dividend or interest, & some actual securities have those, so maybe staked assets are securities too.’ That’s not how the law works. That just means holders of staked assets expect profit…

which alone doesn’t make the assets into securities. Expectation of profit is only one of four Howey test prongs & likely the least important for volatile assets (i.e., non-stablecoins). People hold all kinds of assets with an expectation of profit. Gold, cars, watches, etc.

In other words, expectation of profit is a feature of all investable commodities, not just securities. Whether that profit comes in the form of an increase in market price, a staking reward, or any other mechanism should make no difference to the securities analysis.

A short time later, he went even further, and suggested that rather than the Merge being a mistake, it is win for Ethereum since it reduces the chance that the SEC will classify $ETH as a security:

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