The largest cryptocurrency exchange in the United States has developed a system that can assess which digital assets are likely and likely to be securities that cannot be traded there.
The system introduced on Monday continues to be skeptical of regulators about compliance with federal laws, including investor protection and anti-money laundering regulations.
Crypto currency developers have resisted the idea that most digital assets fall within the existing regulatory approach. A two-year conflict with the Securities and Exchange Commission has led companies to classify cryptocurrencies as assets subject to Wall Street Federal regulations. The SEC has not approved the group approach and may question the decision to list trading tokens.
Existing market operators include Coinbase Inc., Kraken, Circle Internet Financial Ltd. and Bittrex Inc.
SEC Chairman Jay Clayton regularly asks the investor protection used by crypto exchanges. “If they believe price discovery is as rigorous and safeguarding as NASDAQ and the New York Stock Exchange, they are deeply misunderstood,” Clayton said on September 19 at the CNBC meeting. .
The group called itself the Crypto Rating Council and published 20 asset scores on the website on a scale of 1 to 5. The highest value means that the token is security that cannot be issued, sold, or traded by an unregulated crypto company. The issuer does not directly affect the evaluation, but may provide information to challenge the evaluation of received tokens.
According to participants, Bitcoin, the most commonly traded cryptocurrency, is considered
1. SEC officials state that Bitcoin is not security. XRP is one of the world’s largest cryptocurrencies in terms of market value and was ranked fourth.
Some XRP buyers have sued Ripple Labs Inc., the company behind XRP, alleging that it was illegally sold security. Ripple said XRP is a currency and called on a federal judge to dismiss the case last month.
“It’s great that many private companies think XRP is not safe,” says Brad Garlinghouse, Ripple CEO. “But to move the industry forward we need to be clear about US regulations.”
Other members of the council include trading and custodians such as Anchor Labs Inc., DRW Holdings LLC’s Cumberland Unit, Genesis Global Trading and Grayscale Investments LLC. The group is still recruiting members.
The valuation system is based on court decisions and government declarations explaining which assets are securities and which elements are particularly important for the underlying software network of cryptocurrencies. The group agrees with the score for a particular token, but the exchange may make different decisions about what to add to the venue.
The regulator has determined that the decision to purchase which new asset is an analysis of how a particular business is sold, how revenue is used, and whether the buyer expects profit. Crypto companies classify manuals as too vague.
“One of the biggest cryptocurrency uncertainties and one of the reasons why more asset managers challenge this is the uncertainty about whether there is security,” said Brian Brooks’ Supreme Legal Coinbase devised a person in charge evaluation.
The SEC’s executive department has sued several companies that have issued crypto tokens and have settled with other companies for claims that are securities that need to be registered with the SEC.