Cryptocurrency exchange Coinbase has announced a member organization called Crypto Rating Council, which aims to assist the crypto traders to comply with the US federal securities law. The council was formed along with Bittrex, Kraken, Circle, DRW, Anchorage, Cumberland, Grayscale investments, and Genesis.
Till now, the exchanges were following guidelines from the US security and exchange commission (SEC) about the listing of any crypto assets. However, the overall process of analysis and decision making was complex and expensive and often would lead to dissonance among the legal professionals and government officials.
This challenge compelled several industry authorities and security law experts to develop a scalable, standard point-based rating system based on a questionnaire under SEC guidelines and case law which would ultimately rate the asset.
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The council will issue a 1-5 point rating for cryptocurrencies, which are likely to be securities. The standardized system will help the firms to select the cryptocurrencies to add for trading on their exchanges. 1/5 will rate the crypto assets with minimum functional security and 5/5 will certify them as a security.
The council has had rated 20 crypto assets so far. As per the rating, the top cryptocurrency Bitcoin was rated 1 on the scale. Whereas, XRP, Maker (MKR), and polymath (POLY) managed to get 4–4.5.
The council has made it clear that they are not an advisory service for investment purposes. The ratings are derived from the factual analysis based on deliberative methods and are performed by their in-house legal experts along with technical professionals. The council also explains further that it is working independently without any government endorsements.
Coinbase is determined to add more members to the council in the upcoming months. It also wants to rate more assets and release the ratings publicly. It also plans to work outside the US Jurisdiction soon.
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Recently, Coinbase has declared to support a new array of crypto assets that are not being launched in the market. The list includes Kadena, Oasis, Spacemesh, Solana, Nervos, and Telegram.
