By Hidayat Sultanli
On Sep 12, 2020
Crypto exchanges have ensured a massive leap into crypto innovation as leaders including Coinbase, Bittrex, Kraken among other exchanges reportedly developed a system to rate and identify cryptocurrencies as securities. The information was first highlighted by the Wall Street Journal, which read,
“The U.S.’s biggest cryptocurrency exchanges have developed a system to rate which digital assets are probably securities that can’t be traded on their venues—and which likely can.”
According to reports, the reason behind identifying “securities” is to ensure the crypto’s enlistment for investment. Crypto Ratings Council, consisting of a group of top exchanges, will publish online ratings of assets on a scale of 1 to 5. Tokens that rank higher on this score will be considered securities, and as a result, will not be allowed to be issued, bought, or sold on unregulated crypto firms. The report further mentions that,
“Issuers of tokens reportedly won’t have upfront input in the ratings, although they can provide information to “dispute a score their token received.”
Bitcoin, the most trusted cryptocurrency, has been given a “1” rating. While the long-term implications of the rating system have not been cleared, the council of crypto firms includes but is not limited to Anchor Labs Inc., DRW Holdings LLC’s Cumberland unit, Genesis Global Trading, Grayscale Investments LLC, and Paxos Trust Co. LLC. In this light, Mary Beth Buchanan, Kraken’s general counsel mentioned,
“It’s our hope the SEC will view this as a positive step. It does show the SEC what each exchange is doing to come to a decision.”
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