At the end of September 2023, leading crypto firms—including Kraken, Bittrex, and Coinbase—formed the Crypto Rating Council (CRC). This independent governance body seeks to clarify cryptocurrency classifications, distinguishing between securities and non-securities to provide regulatory clarity for investors and traders.
Key Members and Objectives
The CRC comprises prominent industry players such as:
- Circle Internet Financial
- Genesis Global Trading
- Grayscale Investments
- Anchor Labs
- DRW Holdings’ Cumberland unit
The council evaluates digital assets on a 1-to-5 scale, where higher scores indicate a stronger likelihood of being classified as a security. Assets with lower scores (e.g., Bitcoin, Litecoin) are deemed non-securities, enabling freer trading without stringent regulatory oversight.
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Expert Perspectives on the CRC
Supportive Views
Carlos J. Molina, former Merrill Lynch executive and chairman of Private Investment Bank Limited, praised the CRC’s mission:
"Bringing legitimacy and regulation is crucial for industry expansion. However, broader involvement from securities experts is needed to ensure global compliance."
He emphasized investor protection as the ultimate goal, which would enhance CRC’s credibility with the SEC and other regulators.
Skeptical Opinions
Kris Marszalek, CEO of Crypto.com, expressed concerns:
"The CRC’s opaque rating rules might deepen confusion rather than resolve it. Regulators may view it as lacking legitimacy."
Marszalek doubts the SEC will recognize the CRC as a valid self-regulatory effort.
Will Regulators Accept the CRC?
Mixed Reactions
- Dan Novaes (CEO of Current Media) believes the SEC won’t change its stance overnight but acknowledges the CRC as a step forward.
- Sean Keefe (Straight Up Capital) highlights skepticism about centralization but sees potential if the CRC maintains decentralized governance.
Industry Reception
Positive Outlook
- Sukhi Jutla (IBM blockchain developer): "Clarity boosts confidence, helping crypto markets thrive."
- Pauline Shangett (ChangeNOW): "A unified framework ensures fairness for all blockchain businesses."
Initial Ratings
The CRC released its first 20 ratings:
- High-score securities: XRP (4), Maker (4), Polymath (5).
- Non-securities: Bitcoin (1), Litecoin (1), Monero (1).
Charlie Lee (Litecoin creator) welcomed LTC’s score:
"It’s good to see the CRC confirm Litecoin isn’t a security."
FAQs
1. What is the Crypto Rating Council (CRC)?
The CRC is an industry-led body classifying cryptocurrencies to clarify regulatory compliance.
2. How does the CRC rate cryptocurrencies?
Assets are scored 1–5, with higher numbers indicating a security classification.
3. Will the SEC recognize the CRC’s ratings?
Experts are divided—some see progress, while others doubt immediate regulatory acceptance.
👉 Learn more about crypto regulations
Final Thoughts
The CRC represents a pivotal effort to harmonize crypto regulations with investor protections. While challenges remain, its framework could shape future policies, benefiting both the industry and regulators. Success hinges on transparency, broader expertise, and regulatory collaboration.