By On September 30, 2019, US’s crypto exchange, Coinbase announced that they have teamed up with other exchanges like Kraken to launch a Joint Crypto Ratings Council. The council will provide clarification on which tokens will be tradable without the intervention of US Federal Laws.
The council is in the process of recruiting more participants. Current members of the Crypto Ratings Council include Genesis Global Trading, Circle Internet Financial, Grayscale Investments, DRW Holdings’ Cumberland Unit, and Anchor Labs.
New Cryptocurrency Ratings Council
Coinbase stated the status assigned to a cryptocurrency creates a meaningful impact on how the crypto business will be conducted:
“Although the US Securities and Exchange Commission has issued helpful guidance, whether any given crypto asset is security ultimately requires a fact-intensive analysis by knowledgeable technical and securities law experts. This analysis is difficult and expensive to operationalize consistently, may involve judgment calls, and can lead to disagreement among legal experts (and even government officials).”
Chief Legal Officer of Coinbase Brian Brooks designed the new rating systems to create a definitive method that determines which token is a security and which one is not. The lack of an existing system that gives such clarity, he said is “One of the biggest uncertainties around crypto and the reason why more asset managers are not comfortable with it.”
The joint council plans to use a scale of 1 to 5, to publish online ratings for tokens. A digital asset with the highest value will be classified as a security, and therefore it can only be issued, traded, and sold with authorization from regulators.
Kraken, through their general counsel Mary Beth Buchanan, said the joint council hopes that the US Securities and Exchange Commission (SEC), will view their initiative as an effort to create a conclusive solution on the elusive token security status.
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