Charles Hoskinson on Cardano’s Bitcoin Pin in Light of Securities Discussion

Cardano founder Charles Hoskinson blasted US regulators on Monday, calling the ADA and other cryptocurrencies unregistered securities, while giving bitcoin (BTC) a “full pass” from the same level of scrutiny.

According to the developer, Bitcoin can easily meet the legal requirements of an investment contract because securities laws are “overbroad.”

How the SEC defines security

On Monday's live stream, one of Hoskinson's viewers asked him to “talk about the SEC,” one of the two main US market regulators behind enforcement actions against the crypto industry this year. “It's all security now, according to the SEC,” Hoskinson said.

Gary Gensler – Chairman of the Securities and Exchange Commission (SEC) – has repeatedly pointed out that most cryptocurrencies, besides Bitcoin, are securities. This creates a legal hurdle for companies trying to do business with other coins based on legal interpretations that many in the industry don't see as valid.

“Bitcoin and Ethereum say they're safe. Baseball cards can be securities if you really want them to be,” Hoskinson told the audience.

When identifying securities, the SEC follows the “Hawaii test”, which requires that the asset be invested in a joint venture, with expected profits based on other efforts.

Gensler said earlier this year that non-Bitcoin cryptocurrencies definitely have a central group of entrepreneurs who support them, meeting security requirements in a way that Bitcoin does not.

“At a very basic level, they're trying to promote their tokens and attract investors,” he said in an interview.

Hoskinson's argument

But Hoskinson says Bitcoin is centralized in other ways. “If you're called upon to attack three different entities, you're 51% likely to attack with Bitcoin because that's how hash power works,” he said.

Coin investors also largely share the “expectation of returns,” Hoskinson called the “orange-pill children of the moon.”

“Explain to me the difference between Bitcoin and Ethereum and Cardano and the rest of the gang,” he continued. “Run the God Howie test on him.”

Hoskinson supports the US Congress to pass a new law to pass “clarification rules” for crypto, which will stop the industry being the main target of regulators.

Three of the biggest crypto exchange platforms – Binance, Coinbase and Kraken – are currently sued by the SEC for security breaches.