- The Crypto Rating Council (CRC) preliminary reports show three altcoins – Tron (TRX), Polkadot (DOT), and Nervos Network (CKB) are highly likely to be deemed securities.
- While the official reports may change in tandem with the changes on the “Howey Test”, the three currently rank higher than XRP, which led the previous report at a score of four out of five.
In an unofficial report from CRC in April, obtained by TheBlock, Tron (TRX) ranks among the most likely cryptocurrencies to be deemed a security alongside DOT and Nervos’ CKB token. The Crypto Rating Council is a group of cryptocurrency communities and projects that come together to weigh the digital assets on the “Howey Test” scale – a method used by the SEC to assess if an asset is a security.
The results are only preliminary and are subject to some changes – Polkadot in essence is moving to its mainnet and this might have a big effect on the ratings.
The Council was founded by top cryptocurrency firms and exchanges including Coinbase and Genesis Capital promising a new way to help regulators in the U.S. view digital currencies. Back in October 2019, Coinbase’s Chief Legal Officer, Brian Brook, clarified the role of the council stating the council will not rank the quality of projects or sway regulation in favor of them but offer a guiding tool to rate securities from digital assets.
Tron, Polkadot, and Nervos leads the “security” race
In a document published on April 16, TRX, DOT, and CKB tokens each was rated 4.75 stars out of five – signaling a high perception of them being a security surpassing XRP’s tally of 4 on the list. On a ranking between one and five, CRC rates each cryptocurrency on its scale showing which cryptos are more likely to be a security – 1 being the least likely and 5 being the most likely.
The website however does not give a clear rating system on what they test on the blockchains. Some of the factors they could be using includes checking on leading dev team, GitHub repo's, social media community management, and whitepapers.
As mentioned before, the list is not final. One of the sources familiar with the matter said the council makes several revisions on the ratings before release to make sure every factor and fact is captured.
Since releasing its first report in November 2019, the council has added a number of crypto organizations including eToro, Radar, and OKCoin. The council is also growing the number of tokens available on the list recently adding IOTA, Basic Attention Token (BAT), and Circle’s stablecoin, USDC.