Bitcoin Giants Coinbase, Circle, Kraken, Bittrex, Grayscale And Others Band Together To Rate Tokens

Bitcoin and cryptocurrency companies have been struggling in recent years against vague regulation and characterization of cryptocurrencies.

Wild swings in bitcoin and cryptocurrency prices, which soared throughout 2017 only to crash back down to earth last year, meant regulators around the world scrambled to protect potential bitcoin buyers but questions remain around whether digital tokens are securities–leaving crypto companies uncertain about how future legislation will affect them.

Now, bitcoin trading and investment giants Anchorage, Bittrex, Circle, Coinbase, DRW Cumberland, Genesis, Grayscale, and Kraken have banded together to create the Crypto Rating Council in order to better decide which digital assets can and cannot be traded on their platforms.

The group have created what they call a “scalable, points-based rating system” to help define whether a cryptocurrency is or is not a security.

The system will use a set of several dozen questions, “derived directly from SEC guidance and case law.”

“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,” Coinbase wrote in a blog post announcing the council.

“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.”

The system will give bitcoin and similar digital tokens a score between one and five, with a score of one meaning the council’s independent analysis suggests the asset has few or no characteristics consistent with a traditional regulated security.

“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,” the group added.

Bitcoin, along with its major rivals litecoin and monero, have been awarded a rating of one, while ethereum, the world’s second biggest cryptocurrency by value, has been given a rating of two.

Ripple’s XRP, one of the most divisive digital tokens, has been given a rating of four.

The group is planning to add more members and assets in “coming months,” and may develop similar tools for non-U.S. jurisdictions.

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