WHO WE ARE
The Crypto Rating Council is a diverse group of leading crypto businesses committed to the responsible growth and maturation of cryptocurrency markets and related financial infrastructure and trading services.
OUR MEMBERS
Our members share a belief that practical compliance tools can help cryptocurrency exchanges, custodians, trading desks, investments firms, payment providers, financial and technical services providers, and other businesses support the growth and adoption of this important asset class and related blockchain technologies in the U.S. and around the world.
The Crypto Rating Council is a diverse group of leading crypto businesses committed to the responsible growth and maturation of cryptocurrency markets and related financial infrastructure and trading services.
OUR MISSION
We formed the Crypto Rating Council to create a framework to seek to consistently and objectively assess whether any given crypto asset has characteristics that make it more or less likely to be classified as a security under the U.S. federal securities laws.
The Council does not address state securities laws, which are distinct and sometimes may differ materially from U.S. federal securities laws.
The important question of whether any given digital asset is a security—as opposed to a commodity, a currency, or something else—informs critical licensing, registration, and operating obligations for financial services firms, businesses or others that support cryptocurrency.
The Council does not address specific transactions, but if a particular transaction is deemed to constitute the offer and sale of a security, it also has important implications for whether that transaction must be registered or qualify for an applicable exemption, disclosure requirements, applicable regulatory oversight of the transaction and participants and the availability of legal remedies under applicable law.
The SEC has issued guidance that some digital assets may be securities while others may not be, and identified a number of facts and circumstances which may be relevant to that determination. While the SEC’s guidance has been helpful in alerting the industry to complex legal issues, determining whether any particular digital asset is a security remains highly circumstantial and difficult to resolve even with the help of leading legal and technical experts. This complexity has led to expensive, redundant, and frequently inconsistent compliance analysis among financial services firms and other businesses and has generally slowed adoption and usage of new cryptocurrency assets in the U.S.
We believe that our cryptocurrency framework makes it easier for members to apply the law more consistently and efficiently across digital assets.
OUR RATING FRAMEWORK
At the core of the Crypto Rating Council is our rating framework, a points-based rating system built upon a set of factual questions that assess each element of the Howey test, a legal test for investment contracts that courts may use to determine whether an asset is a security.
Our framework is derived directly from case law and SEC guidance and has been structured to emphasize objective, repeatable, and fact-driven responses that can be answered more consistently across different assets and across the same asset over time.
The analytical framework results in a score between 1 and 5 for each asset we review.
A score of 1 means the Council’s analysis suggests the asset has few or no characteristics consistent with treatment as an investment contract, and therefore not a security under the U.S. federal securities laws.
A score of 5 means the Council’s analysis suggests that an asset has many characteristics consistent with treatment as a security.
Any score between 1 and 5 should not be treated as dispositive evidence that an asset would not pass the Howey Test. A number alone is not a determination of whether an asset is or is not a security, and the security status of any particular digital asset would be determined by the particular facts and circumstances incident to that asset.