Coinbase, Circle, Bittrex, Kraken, along with other major U.S. crypto exchanges and custody platforms have formed an independent rating platform for crypto tokens.
Maker and Polymath are Most Likely Securities, Says CRC
Dubbed the Crypto Ratings Council (CRC), the body reportedly evaluates cryptocurrencies to see if they classify as securities.
According to its maiden ratings report, Maker (MKR) and Polymath (POLY) have the highest semblance of securities characteristics among all the 20 evaluated cryptos. Both tokens scored 4.5 out of a maximum of 5 points.
Coinbase, Kraken, Poloniex, Bittrex etc graded tokens by how close they are to securities. 5 is the highest score
The most security-like token? Maker’s MKR. Who would’ve thought, “shareholders voting on things” is actually something that securities do, whoa
— Udi Wertheimer IS RIGHT (@udiWertheimer) September 30, 2019
Based on the notes provided by the CRC, a score of 1 means the crypto is least like a security while a score of 5 means the token shares many similarities with a security.
For MKR, the Council noted:
Usage of securities-like language.
Marketing of the token suggesting an opportunity to earn profits.
For POLY, the CRC highlighted the limited utility and largely centralized nature of the token as the reasons for its characterization of being like a security token.
XRP which continues to divide opinions on whether it is a security token obtained a rating of 4. The CRC identified “usage of securities-like language” and marketing of the tokens as among reasons for its rating.
Bitcoin Has Least Resemblance to Securities
On the other end of the spectrum, Bitcoin (BTC), Litecoin (LTC), Dai (DAI), and Monero (XMR) all scored one on the CRC’s ratings.
For all four tokens, the CRC recognized the lack of marketed token sales in expectation of a profit as justification for its low resemblance to security tokens.
The Council also pointed out the decentralized nature of the projects, as well as, their tangible utility.
Back in 2018, the U.S. Securities and Exchange Commission (SEC) had classified bitcoin and like cryptos as not being securities.
CRC Ratings to Serve as U.S. Crypto Trading Template?
Announcing the formation of the CRC in a blog post published on Monday (September 30, 2019), Coinbase said the move was part of efforts to simplify the classification of cryptocurrency tokens.
According to the announcement, the Council’s ratings are as a result of independent analysis on the various cryptocurrency tokens. An excerpt Coinbase’s statement reads:
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.
With U.S.-based exchanges increasingly coming under pressure from regulators, the CRC’s rating might serve as a guide in determining which tokens to list.
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Images via Shutterstock, Twitter @udiWertheirmer