Here's how Coinbase, Kraken and others have been deciding which cryptos are securities


The Crypto Rating Council has published its rubric for appraising whether or not a cryptocurrency is a security. 

The Crypto Rating Council, or CRC, is an industry group uniting many of the biggest names in crypto to put together standards for deciding which tokens are securities. Members include Coinbase, Anchorage, Kraken and Circle.

The newly publicized rubric aims to provide an objective means of scoring tokens. It is based on a series of questions, the answers to which yield numerical ratings that are supposed to quantify how likely it is that a given digital asset is a security. The CRC has published ratings for 27 tokens, but this is the first time the group has made its methodology public.  

The CRC says it has updated the rubric in response to changing legal realities, specifically "to take into account those facts which, in its view, seem to be most relevant in concluding whether an asset is likely to be viewed as a security in a court of law."

The CRC originally made headlines upon its launch in fall of 2019 by aiming to put together a united front for the crypto industry to assemble standards to comply with the Securities and Exchange Commission (SEC).  But the group hasn't been very active lately, at least in its public-facing work. Its most recent set of token reviews happened in early 2020. 

Arguments over whether a given asset qualifies as a security have frequently pitted token issuers against the SEC. SEC enforcement actions against development firms and issuers of tokens like EOS and GRAM were in large part responsible for ending the ICO boom of 2017-2018. 

Many in the industry have called on the SEC to release its own standards for determining which cryptocurrencies fall under the commission's jurisdiction. In its own legal battle with the SEC, Ripple has, for example, pressed for the release of commission communications leading up to its determinations that Bitcoin and Ether are not securities, while XRP is. 

The CRC, for its part, found XRP to be a 4 out 5, with a score of 5 meaning that the asset is most likely a security. 

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May 5, 2022, 3:17PM UTC