The New Crypto Rating Council Will Assess Digital Assets

October 1, 2019 | Digital Assets, News

The Council, launched by big crypto exchanges, will assess digital assets to ascertain if they qualify as securities.

The digital trading platforms that have joined hands to launch the Crypto Rating Council are:

  • Coinbase
  • Kraken
  • Circle / Poloniex
  • Bittrex
  • Genesis
  • Cumberland
  • Grayscale
  • Anchorage

The Crypto Rating Council (CRC)

The (CRC) says on its website regarding SEC guidance: “Determining whether any particular token is a security remains highly circumstantial and difficult to resolve even with the help of leading legal and technical experts.”

Moreover, the (CRC) says it will “consistently and objectively” assess if a crypto asset classifies as a security under US laws.

Is it a “security?” The CRC assigns ratings (1 to 5)

Working with a points-based system the CRC will assess the digital asset within the framework of the Howey test factors: (i) whether crypto purchasers invested money, (ii) in a “common enterprise,” (iii) with a reasonable expectation of profit, (iv) based on the efforts of others.

Some of these point-based ratings appear on a page of the website. These are scaled from 1 through 5. For example, Polymath carries a rating of 4.5, whereas Bitcoin and Monero are rated 1.00.

A score of 1 means the group’s analysis found that an asset has few or no characteristics consistent with treatment as a security. A score of 5 means the Council’s analysis found that an asset has many characteristics strongly consistent with treatment as a security. However, scores in between reflect the relative strength and presence of characteristics relevant to the Council’s framework.

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