Ripple CTO Counters Notion BTC Can’t Be Classified as a Security

• A Bitcoin maxi said Bitcoin can’t be classified as a security because it is a code given away for free. 
• The user continued that the code (Bitcoin) is a form of speech, and speech is protected in the U.S.
• Ripple CTO David Schwartz countered the maxi’s argument, saying whether code is speech depends on context.

Amidst increased expectations of a spot Bitcoin approval, concerns about whether the U.S. Securities and Exchange Commission (SEC) could classify Bitcoin as a security have risen, with Maxis saying the digital asset falls outside the securities radar. However, Ripple’s CTO, David Schwartz, countered that even the world’s largest digital asset by market cap could also be a security. 

In a post shared on X, Bruce Fenton, CEO of Cypherpunk and Bitcoin maximalist, argued that Bitcoin falls outside of the securities classification. The CEO based the argument on the fact that Bitcoin is code given away for free. Noting the decision in Bernstein vs. Department of Justice, Fenton continued that “code is speech. Speech is protected in the USA.”

In response, Schwartz countered that Fenton’s argument is “no different from arguing that books are speech and therefore the government can’t prohibit me from beating you with a book.”

According to Schwartz, a broad range of things could be categorized as speech so long as they communicate ideas to people. Code, the CTO said, belongs to this category too. The difference is in how the code is used and to what degree it fulfills any other purpose. 

Furthermore, Schwartz argued that the government can prohibit speeches in other forms if it deems them undesirable.  However, Schwartz concluded that the power in question may be challenged on the grounds of “an as-applied challenge” if it significantly hinders free speech. 

The argument follows an earlier tweet by another Bitcoin supporter that suggested the SEC could classify Bitcoin as a potential security. As mentioned in the post, the observation was noted in BlackRock/iShares Bitcoin ETF filings. “Seems silly, but apparently, the SEC wants that language in there,” the user said. 

Meanwhile, Bitcoin and the second-largest cryptocurrency network by market cap, Ethereum, are two cryptocurrencies that, so far, appear shielded from the SEC’s securities classification. However, that hasn’t gone unnoticed by the rest of the crypto ecosystem. 

Last week, Cardano’s founder, Charles Hoskinson, blurted out his frustration over the SEC’s approach to securities classification, accusing the regulator of overstretching the investment contract theory applications and giving Bitcoin and Ethereum free passes. Ripple Labs executives have also mentioned similar complaints in the past.