The group includes Coinbase, Circle, Grayscale, Kraken, Anchorage, Bittrex, Genesis and Cumberland DRW. Ecosystem companies are on uncertain ground regarding how legislation will affect them.
The companies that use Bitcoin have been fighting in recent years against vague U.S. regulations and in favor of more accurate definitions of cryptocurrencies.
The sharp changes in the prices of Bitcoin and other cryptocurrencies, which reached their highest values throughout 2017 only to fall back to the ground last year, prompted regulators from all over the world to fight for legislation to protect potential buyers. However, there are still doubts as to whether certain cryptocurrencies are securities, which leave ecosystem companies on uncertain ground regarding how the legislation will affect them in the future.
However, Bitcoin trading and investment companies such as Anchorage, Bittrex, Circle, Coinbase, Cumberland DRW, Genesis, Grayscale and Kraken have joined to create the Crypto Rating Council in order to make better decisions on which digital assets can and cannot be traded on their platforms.
The system will use a set of several dozen yes/no factual questions, which are derived directly from the case law and guidance of the U.S. Securities and Exchange Commission (SEC), as posted by Coinbase on its blog to announce the Council.
Apart from that, the release adds that the Crypto Rating Council is also working hard to focus its framework on objective, repeatable and fact-driven questions about different assets that can be answered consistently by technical experts over time.
The Crypto Rating Council explains that the result of this analysis is a score that makes it easier for the members to synthesize the analysis of many tokens and make their own independent business decisions about whether or not they should support a given asset.
The system will give Bitcoin and other similar tokens a score ranging from one to five. A score that is close to one would mean that the Council’s independent analysis suggests that the asset has few or no characteristics consistent with traditional securities.
The Council added that they expect some ratings to change over time and will be willing to accept and consider comments from asset issuers whenever they want to share additional information or clarifications that may affect an asset’s rating.
Bitcoin, along with its main rivals Litecoin (LTC) and Monero (XMR), received a rating of one, while ether (ETH), the second-largest cryptocurrency by value, received a rating of two.
Ripple’s XRP, one of the most controversial digital tokens, received a rating of four.
The group plans to add more members and assets in the following months. It may also develop similar tools for non-U.S. jurisdictions.
One of the reasons for the creation of the Crypto Rating Council was the need for a better understanding of the value of cryptocurrencies. These companies came together to rate the main crypto assets and decide on the best ones to trade on their platforms.
The questions that they include in their analysis are expected to be answered consistently over time. They also make use of asset issuers’ comments and clarifications to better assess the value of cryptocurrencies.
By Willmen Blanco