Top United States crypto exchanges including Coinbase, Bittrex, Kraken and Circle Internet Financial have reportedly worked on developing a new system that helps crypto exchanges to track which digital asset is probably a security.
What is Crypto Rating Council?
It was first reported by Wall Street Journal on Monday, stating that the new system called “Crypto Rating Council” will quickly guide these exchanges whether or not to list a particular token on their trading platforms. The development of this new system comes in a wake of vague regulations that crypto industry have been facing, especially when regulators likely defining crypto tokens as a security.
Following the delays over delays from the respective policymakers, the group of bitcoin trading and investment giants have finally built a solution of their own. The new system dubbed “Crypto Rating Council” is a scalable points-based rating system that indicates if the digital asset is a security. Source highlights that the newly developed Crypto Rating Council is built upon the set of questions “derived directly from SEC guidance and case law”. In a detail blog post, Coinbase elaborates the system as follows;
“We also worked hard to focus our framework on objective, repeatable, fact-driven questions that can be answered consistently by technical experts across different assets and over time, Coinbase explained. “The result of the analysis is a score which makes it easy for members to synthesize the analysis across many tokens and make their own, independent business decisions about whether or how to support an asset.”
The scale of 1-5 will determine the result of the feature that specific token carries – however, the highest value will indicate the token is a security. For instance, the result of BTC as per Crypto Ratings Council is 1 which signifies that it counts relativity less feature to consider as security. On the other hand, Maker, Polymath are the two tokens that bagged 5th rank which indicates it is a security. XRP falls on 4th scale of being security followed by Augur between 3-4, Decentraland, EOS, FIAM, Hedera Hash, Loom Network, Sellar, Tezos. Moreover, Algorand, Chainlink, Ethereum, Numeraire, and Zcash are few of the tokens which captured rating 2. Lastly, Bitcoin, Dai, Litecoin and Monero are scored as a 1 by the Crypto Ratings Council.
Image source – TheBlockCrypto
Concerning the rating system, Mary Beth Buchanan, Kraken’s general counsel says that;
“It’s our hope the SEC [the U.S. Securities and Exchange Commission] will view this as a positive step. It does show the SEC what each exchange is doing to come to a decision.”
Image Source – Flickr