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Cryptocurrency exchanges unite to create digital token rating system

By Lawrence Gash

Crypto exchanges develop digital token rating system

Cryptocurrency exchanges unite to create digital token rating system

Major cryptocurrency firms are uniting to develop a rating system for digital tokens, CNBC reports. This points-based rating system will depend on whether a digital asset falls under American securities law under guidance from the SEC.

The rating will be developed by the Crypto Rating Council whose founding members include Coinbase, Bittrex, Kraken, Circle and Grayscale. It aims to help financial services companies that are interested in cryptocurrencies but unsure as to their legal status.The system will rate how close digital tokens are to securities.

In a blog post Coinbase said:

"The result of the analysis is a score which makes it easy for members to synthesise the analysis across many tokens and make their own, independent business decisions about whether or how to support an asset.

We expect that some ratings will change over time and we will accept and consider feedback from asset issuers when they want to share additional information or clarifications that may impact an asset’s rating."

Investors are concerned by the volatile nature of the cryptocurrency market and the speculative strategies of many investors. With some retail investors getting their fingers burned by initial coin offerings (ICOs) for new coins.

According to the Crypto Rating Council, Bitcoin (BTC) and Litecoin (LTC) are not likely to fall under securities laws, while Ripple (XRP) is more likely.

Tokenised securities are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how tokenised securities and leverage work and whether you can afford to take the high risk of losing your money. Nothing in the above article should be regarded as a recommendation to trade generally, to trade on a particular platform or to trade in a particular asset. Asset prices can go down as well as up and past performance is not a guide to future performance. Investors and traders should thoroughly research an asset or strategy before making any trading or investment decision and if necessary seek professional advice.

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