New Crypto Rating Council Led by Coinbase Receives Mixed Feedback
The launch of the Coinbase-led ‘Crypto Rating Council’ has initially created optimism that unregulated crypto exchanges seek to provide a more trustworthy environment. However, parts of the crypto community soon enough started to criticize the project for its potentially manipulative nature, while others have decided to welcome it as a sign of progress.
A number of cryptocurrency exchanges have recently formed the ‘Crypto Rating Council’ (CRC), a joint rating system that would define certain digital assets as securities. With several prominent founding members such as Coinbase, Kraken, and Bittrex, the council established an optimistic view within the crypto community as these unregulated exchanges would be one step closer towards achieving compliance.
The Crypto Rating Council will rate a number of cryptocurrencies on a scale of 1 to 5, where the highest value represents a security, while the lowest value represents a non-security (such as Bitcoin). At the time of writing, the council has still not clarified which cryptocurrencies it views as securities.
Although the initiative presents a positive move towards complying with regulatory entities, several key players and legal experts expressed mixed feelings about the initiative. Some parts of the Crypto Twitter community went as far as to mock the project, while others have welcomed it.
In an interview with CoinDesk, ex-Deputy Director of the Division of Trading and Markets at the SEC, Gary Goldsholle, stated that the council was a ‘great idea.’ He noted that the Crypto Rating Council may benefit smaller entities and startups that might not have the required resources to conduct regulatory analysis at the scale that the SEC demands.
Goldsholle remarked the rigorous process in which the SEC ‘reviews a digital asset to ascertain whether it is a security.’ Commenting on the lack of a previous rating council, he critizised that it has created a situation where certain platforms possess more information about certain cryptocurrencies than other platforms do, resulting in an unfair competitive advantage.
According to the official announcement by the Crypto Rating Council, Coinbase is leading the initiative. At the time of writing, they have not responded to an inquiry for a comment. However, the chief legal officer at Coinbase tweeted that the council members do not offer legal advice.
Brian Brooks, the CLO at Coinbase, stated that the efforts of the Crypto Rating Council are comparable to an automated compliance tool. Commenting on the potential misuses of the initiative, Brooks said that even though the council members certainly have an interest in listing more cryptocurrencies, they do not plan on adding securities due to the potential of fines and other kinds of penalties.
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About The Author
Raphael is an avid crypto-enthusiast and follows the latest developments in the blockchain industry closely. He has been writing crypto news articles for the better part of five years now and started writing for CryptoRitter in 2018.