Will the Industry's Effort Help with Murky SEC Regulations?
The U.S. Securities and Exchange Committee known as the SEC, has had rulings before that baffled cryptocurrency insiders. Recently, the SEC fined the cryptocurrency project EOS, $24 million dollars as a penalty for an unlawful 2017 ICO. It is important to note that EOS reportedly raised a whopping $4 billion dollars. Some other cryptocurrency projects that started as ICOs were less lucky. Paragon & Airfox ICOs were fined $250,000 and ordered to compensate investors in 2018 by the SEC.
The SEC has hinted that Bitcoin & Ethereum are not securities in the past. Despite that, they are far from being clear as to which cryptocurrencies constitutes a security. In a surprise move, a handful of cryptocurrency industry leaders collaborated to internally regulate and attempt to classify securities.
Will the SEC Adhere to the Crypto Rating Council?
Some of the biggest names in the world of cryptocurrencies have collaborated to create the Crypto Rating Council. This includes Coinbase, Bittrex, Circle, Kraken, Genesis Global Trading, and Greyscale invest.
Essentially the Crypto Rating Council will rate and rank different cryptocurrency assets on a 1 to 5 scale. The lower the score, the more likely the are to be considered a security. The rating will be a combined score of multiple factors. This includes a project's white paper, social media standing, functionality, asset issuance history and codebase contributions to name a few.
So far, no hints have been given as to what will be the first asset they'll grade.
Currently no regulators endorse the ratings issued. Neither the SEC nor the CFTC is involved, although the Crypto Rating Council have shared their methodology with the SEC.
While there is no indication that the SEC will take any ratings to heart, the Crypto Ratings Council might be able to provide clear standards for the industry.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado