A number of exchanges including Coinbase were forming Crypto Rating Council, using a 1-5 rating scale, to expurgate whether cryptocurrencies are securities. The initiative of categorizing digital assets received a compound backwash from legal experts and industry players.
XRP, maker, EOS, augur, ethereum and somer other assets have been felt between 1 and 5. In regard of CRC there are optimisms as well as criticisms. The framework of the council could do good tiny issuers and platforms having not enough resources to operate the scale of analysis as SEC requires.
The SEC rigorously views a digital asset for ascertaining it as a security. CRC is being led by Coinbase. According to the CEO of Coinbase, Brian Brooks, said that the members are not providing legal advice.
The move of CRC self-regulatory is not new but it’s not a bad idea and it emerges a host of ideas including anti-competitive cartel concerns. But this self-regulation approach would have been a preferable approach for the crypto sector in its earliest days. But its yet vague that how SEC views self-regulation.
On the other hand, centralized structure for the token issuers to provide all necessary information appears to be a supportive structure. Tokenization can be an important part of future. To realize future the sector needs to be engaged with regulators. The industry should not depend upon these ratings alone even though the CRC might seem like an authentic attempt of self-regulation.
Anxiety of Clearness
The execution of CRC’s plan is questionable now. A question about subjectivity stands that no release of weights and calculations has been outlined by CRC. What the rating of 2,3 or 4 means is unknown. These intermediate rankings may not hold much significance as a 2,3 or 4 refers the digital assets having some characteristics of security or which one is non-security is unknown.
Now it is creating a common view to the status of certain digital assets. More transparency should be in the analysis that led to the ratings and hopefully it will assist token issuers to comprehend about the design of token or network to avoid being classified as a security. Assets scoring in between 1 to 5 show some features of a security but not for all members.
Litigants were searching for discovery of deliberative materials issued by outside council used to calculate the ratings. The exchanges could be assisted by the framework in controlling the narrative around how assets are regulated. CRC is going to provide greater information that will encourage issuers.