Top exchanges team up to determine whether crypto assets are securities

A series of unregulated crypto exchanges have taken compliance into their own hands by rating digital assets on their similarity to securities

A number of top digital asset exchanges including Coinbase, Bittrex and Kraken have teamed up to assess which cryptocurrencies possess characteristics of securities.

According to the Wall Street Journal, the process will involve exchanges rating particular cryptocurrencies between one and five to see if they can remain listed on exchanges from a compliance standpoint.

Token issuers will reportedly have no input on the initial ratings, although they will be able to dispute their score by providing information to the contrary.

The world’s largest cryptocurrency in terms of market cap, Bitcoin, has been giving a ‘1’ rating which means that it is the least like a security, while the Maker token has a ‘4.5’ rating, making it very similar to a security.

The aim is to assist the SEC and show that there is a conscious effort going towards safeguarding investors and the categorisation of cryptocurrencies as potential securities.

Mary Beth Buchanan, Kraken’s general counsel said: “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”.

However, it seems as though the SEC has not yet been consulted on this new process. This could eventually be detrimental to exchanges as the SEC won’t take kindly to largely unregulated exchanges attempting to impose securities laws on unregulated digital assets, especially as they don’t have the authority to do so and it may impact the price of said assets.

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