If you haven’t heard of the Crypto Rating Council, join the club. Most people haven’t.
CRC rates the likelihood U.S. regulators will classify your favorite cryptocurrency as a security. This helps you know which tokens can and can’t be traded on U.S. exchanges—and which ones might get de-listed if the government says so.
Props to Coinbase, Kraken, Poloniex, and Bittrex for collaborating on this effort.
While you may laugh at crypto exchanges trying to guess about what U.S. regulators will do, keep in mind CRC isn’t designed for us. It’s for cryptocurrency professionals who deal with licensing, registration, and operation of financial services. They need to read the regulatory tea leaves.
More than that, CRC makes crypto seem professional to the outside world. If you only care about selling your bitcoin for more than you bought it for, you need CRC.
Credibility has value
In the financial sector, rating companies abound.
Moody’s, Morningstar, Gartner, and other firms make a lot of money selling their analysis of businesses and financial products.
Many financial professionals rely on this analysis to make multi-million dollar decisions. As a result, ratings companies try to make their assessments as accurate and well-researched as possible.
This is serious business.
CRC provides the same type of service. Nobody yet knows how much the industry will value CRC’s actual ratings and I don’t know how much energy CRC’s partners put into it, but the effort matters.
If you want people to take cryptocurrency seriously, you to treat it like a serious business.
Changing hearts and minds
The more cryptocurrency “looks” and “acts” like a traditional industry, the more people will think of it like a traditional industry: professional, regulated, and responsible.
When crime and unclear regulations keep 75 percent of all U.S. investors away from crypto, every little bit helps.
Ratings are a thing
Many sectors of the economy have ratings services—from shipping to health care to education. Books, movies, and restaurants get ratings, too.
Cryptocurrency already has ICO ratings, CoinGecko ratings, Weiss ratings, and other ratings services. So what makes CRC different?
It’s the only service that assesses U.S.-specific legal risks.
Crypto Rating Council: More About the Framework
In that regard, CRC fills a very important gap. U.S. has strict financial regulations and a lot of money. Financial professionals need as much information as they can get.
Will the industry care about CRC?
Beyond optics, I’m not sure what specific value CRC’s list provides. Time will tell.
After all, its ratings come from “outside counsel and other experts,” not government advisors or securities lawyers.
Also, I suspect CRC’s exchanges hate rating their assets. It’s a lot of work and they don’t have much case law to go on. I asked them for comment but nobody responded to me.
Still, I’d assume CRC’s partners would rather work on perfecting their own businesses than making educated guesses on an esotetic, evolving topic. Not to mention, the moment a single rating fails, the whole effort loses credibility.
But it’s worth trying.
At the end of the day, altcoins will come and go. Reputations tend to stick around.
Let’s focus on building a good reputation for cryptocurrency. If you care about mainstream adoption—“price go up”—then legitimacy is a necessity.
Mark Helfman is a top writer on Medium for cryptocurrency, finance, and bitcoin topics. His book, Consensusland, explores the social, cultural, and business challenges of a fictional country that runs on cryptocurrency. In a past life, he worked for U.S. House Speaker Nancy Pelosi.