On Saturday (April 1), highly respected equity research analyst and investment strategist Lyn Alden ignited a conversation on Twitter by suggesting that Ethereum ($ETH) is likely a security based on the Howey Test.
Alden compared commodities and securities, emphasizing the differences in centralization and potential legal ramifications of such classifications.
Alden initiated the conversation by tweeting, “Commodities don’t need to wait for a group of paid developers to allow them to be unstaked. Securities do.” In response, Erica Wall pointed out the importance of asset classification statists but not libertarians. Alden clarified her position, explaining that analyzing the level of centralization is useful for understanding the likely outcomes of legal actions, rather than expressing a personal stance on securities laws.
When Wall questioned whether Bitcoin could also be considered a security, Alden replied, “Voluntary (soft fork) updates by developers for a protocol that itself never did an ICO? No, not a security by basically any existing definitions we have.”
Real Vision CEO Raoul Pal joined the discussion, asking if Alden’s view on Ethereum being a security was an April Fools’ joke. Alden confirmed her serious stance, responding, “No; I think ETH is likely still a security based on the Howey Test. Doesn’t mean I think any particular action should be done.”
Alden also mentioned that the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) appear to be in a jurisdictional feud over Ethereum, creating uncertainty over the ultimate classification of the cryptocurrency.
Alden’s perspective on Ethereum as a security has generated substantial interest and reactions within the cryptocurrency community, especially from industry leaders like Raoul Pal. As the regulatory landscape continues to evolve, the classification of Ethereum and other cryptocurrencies will remain a topic of debate and discussion.
Recently, Alden, who provides equity research and investment strategies for clients, shared her outlook for Bitcoin during an interview for the Swan Bitcoin YouTube channel.
Alden expressed some concerns regarding the second half of the year. She stated that once the debt ceiling is resolved, the U.S. Treasury is likely to try to withdraw liquidity from the market to refill its Treasury account. If the Federal Reserve is still withdrawing liquidity during this time, it could lead to a rapid decrease in liquidity, which could result in negative retests, consolidations, and corrections. However, professional traders may try to take advantage of this situation.
Despite these concerns, Alden believes that Bitcoin is an attractive investment opportunity, especially from a three to five-year perspective. She considers it to be a deep value zone based on various metrics. Alden recommends monitoring the fundamentals of the Bitcoin network and assessing its health. She suggests investing in Bitcoin if the network is still functioning as intended, there are no significant competitors on the horizon, and all aspects of Bitcoin continue to work as they should. Overall, she believes Bitcoin is a strong buy.
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