Cryptocurrency industry leaders are joining hands to help other firms functioning in the crypto space be on the right side of the law, by following securities rules and regulations as stipulated by the US Federal government.
Cryptocurrency bigwig Coinbase, shared a company blog post where it announced that it has co-founded the Crypto Rating Council, which is a member organization intended to assist other crypto companies assess if they are within compliance of contemporary U.S. Federal Securities Law. Other cryptocurrency firms Bitrex, Circle, Anchorage, Genesis, DRW Cumberland, Kraken and Grayscale Investments are other cryptocurrency firms which were present in support at the launch of the Council.
The Council has been tasked with giving a 1-5 rating to cryptocurrencies and tokens, based on their similarity to an existing security. As per the rating system, a rating of 1 will express that the crypto asset has few functional similarities to a security. A rating of 5 will indicate that the cryptocurrency, in question, is absolutely consistent with the definition of a security.
So far, the Crypto Rating Council has rated 20 crypto assets. Out of these cryptocurrencies that it has rated, Bitcoin i.e. the #1 cryptocurrency by market cap has been rated 1. XRP, polymath (POLY) and maker (MKR) are cryptocurrencies which either scored 4 or 4.5.
The Rating Council is clear in stating that the rating should not be confused with industry advice. It is founded on past SEC guidance and case law, as well as the legal and the technical experience of the firms which have made up the group.
Kristin Smith, representative of The Blockchain Association has said that the initiative was pioneered by Coinbase in an attempt to keep pace with the “incredibly complicated (U.S.) securities laws”. As of now, the Council has only rated the tokens listed by exchanges which are participating in the council. Coinbase’s blog concluded by saying, that all ratings are liable to change.
Gustavo Fonseca loves anything digital and crypto-related which makes him sit up and pay attention. He got into the world of digital marketing and business digital transformation career in 2010. Some time later he got into Crypto, a dynamically developing segment at the intersection of the financial services and technology. Gustavo joined TheDailyCoins in September 2018.