Leading US-based cryptocurrency exchanges Coinbase, Kraken, Poloniex and Bittrex have come together to launch a new system which rates which cryptocurrencies are likely to be deemed as securities under US laws. Called the Crypto Rating Council, the system will help operators decide whether they want to list these cryptocurrencies on their platforms.
The Crypto Rating Council will publish online ratings of cryptocurrencies on a scale of 1 to 5, with 5 signifying that a token is likely to be a security whereas 1 is a perfect score allocated to those cryptocurrencies which have a low likelihood of being deemed as a security. Issuers of digital assets will have the option to dispute a score their token has received, according to the Wall Street Journal.
Their own website states, “The Crypto Rating Council is a diverse group of leading crypto financial services firms committed to the responsible growth and maturation of cryptocurrency markets and related financial infrastructure and trading services. Our members share a belief that practical compliance tools can help cryptocurrency exchanges, custodians, trading desks, investment firms, and other financial services providers support the growth and adoption of this important asset class and related blockchain technologies in the U.S. and around the world.”
Not surprisingly, Bitcoin has been given a score 1 by the Council, in addition to Litecoin, Monero and Dai. The controversial Ripple has a score of 4 whereas EOS, Stellar and Tezos have received an identical 3.75. Interestingly, Ethereum has been given a score of 2.
The move should be seen as another self-regulatory measure by an industry which is trying to win the confidence of the regulators. The US Securities and Exchange Commission (SEC) has charged a lot of entities for alleged securities violations, including ICOBox and Block.one. While it is not necessary that the SEC may agree with the scores of the Council, it will provide a useful indicator to industry watchers.
(Image Credit: Crypto Rating Council Website)