The Biggest Crypto Players Create a Rating Council
- Their newly created scalable and points-based rating system will determine whether a token is a security or not.
- For the moment only five cryptocurrencies have been classified but more will be added in the upcoming months.
A common problem for all cyptocurrency companies in recent years has been the ambiguous characterization and regulation of digital assets.
During the last few years we have witnessed incredible price swings of not only bitcoin but all cryptocurrencies. Regulators around the world pushed to protect bitcoin buyers but one of the biggest questions still remains unsolved – are digital tokens actually securities? This uncertainty of how they are classified is leaving companies puzzled on how an eventual legislation would affect them.
A huge step forward is the partnership between crypto giants Bittrex, Coinbase, Circle, DRW Cumberland, Grayscale, Genesis, Anchorage and Kraken and their mutual effort in creating the Crypto Rating Council. The main idea of this council will be to determine which digital assets could and could not be sold on their platforms.
As the group noted, they have designed a “scalable, points-based rating system” that will help in defining which cryptocurrency is a security and which isn’t. The questions that are going to be used in the classification system come “directly from SEC guidance and case law.”
The council was announced yesterday in a blog post by Coinbase. In it, they express the workflow:
“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, … 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.”
Via this system, every digital token will receive a score between one and five. A score of one would mean that the analysis of the council sumbits that this asset has little to no features coherent with a traditional security.
The council commented:
“We expect that some ratings will change over time and we will accept and consider feedback from asset issuers when they want to share additional information or clarifications that may impact an asset’s rating.”
For the moment the ratings are as follows:
- One point – BTC, LTC, and Monero
- Two points – Ethereum
- Four points – XRP
Although, this is a very small list the council is planning to include more assets and member organizations in the upcoming months.
- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
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- An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
- The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.