Major cryptocurrency exchange operators—including Coinbase, Kraken, and Circle—have collaborated to establish a scoring system that evaluates digital tokens based on their resemblance to securities under U.S. regulations.
The Crypto Rating Council Framework
Coinbase unveiled this points-based evaluation system in a Monday blog post. The framework applies guidance from the U.S. Securities and Exchange Commission (SEC) to determine whether a digital asset qualifies as a security under federal law.
"The output is a score that enables members to comprehensively analyze multiple assets and make independent business decisions about supporting them," explained Coinbase.
Developed by the newly formed Crypto Rating Council (CRC), this initiative aims to help financial service providers confidently expand cryptocurrency offerings.
How the Rating Scale Works
The CRC rates digital currencies on a 1-to-5 scale:
- 1: Minimal/no security characteristics (e.g., Bitcoin)
- 5: Strong resemblance to traditional securities
Founding members include:
- Anchorage
- Bittrex
- DRW Cumberland
- Genesis Trading
- Grayscale Investments
Addressing Industry Uncertainty
This system tackles a persistent question in crypto markets: Are assets like Bitcoin securities subject to SEC oversight? The 2017 ICO boom highlighted risks, with many retail investors suffering losses from unregulated token sales.
Key Findings from Initial Ratings
- Least likely to be securities: Bitcoin (BTC) and Litecoin (LTC)
- Higher security resemblance: XRP (contrary to Ripple CEO’s public claims)
SEC Chair Jay Clayton has previously stated that Bitcoin isn’t a security, while most ICO tokens are. Some argue cryptocurrencies behave more like commodities (e.g., gold) than securities.
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FAQ: Crypto Rating Council Explained
Q: Will ratings change over time?
A: Yes. The CRC will reassess assets as new regulatory guidance or project details emerge.
Q: Can token issuers appeal their rating?
A: Yes. The Council welcomes additional context from projects that might affect scoring.
Q: How does this impact crypto adoption?
A: By clarifying regulatory exposure, the system helps exchanges and institutional investors navigate compliance risks.
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The Path Forward
Coinbase notes that ratings may evolve, especially as token issuers provide feedback. This collaborative effort reflects the industry’s push toward standardization and transparency—critical steps for mainstream financial integration.