Exchanges Categorise Cryptocurrencies for the Sake of the SEC

Cryptocurrency Categories

The world of cryptocurrency has become a complex one of late, especially with the eyes of the SEC firmly planted on the e-currency world, seeking ways in which to regulate the industry. The IRS has turned its attention towards the cyber-sphere too, seeking to ensure that those benefiting from incomes made by investing in cryptocurrency assets like Bitcoin are paying taxes on their increase. 

When it comes to businesses supporting the crypto world, the complexities multiply, especially when tokens have not been clearly classified as in the past. One of the biggest uncertainties has surrounded the point of whether cryptocurrencies can be classified as securities or not, hence whether they are subject to laws and regulations that come with such classification or not. 

The good news is that some of the top crypto exchanges have pulled together to settle these disputes in an attempt to help regulate the marketplace. This is all done in hopes of satisfying certain requirements of the SEC regarding cryptocurrency grey areas. 


Some of the top cryptocurrency exchanges in the world, including Coinbase, Kraken, Circle, Bittrex, Grayscale, Anchorage, Genesis, and DRW Cumberland, have banded together in an effort to remain proactive to the call for regulation in the cryptocurrency industry.  

The first and biggest step they have taken is to establish a unified council called the Crypto Rating Council.  

This body has been joined with the main purpose of creating and implementing a viable system to rate how close specific cryptocurrencies are to being classified as securities. This both helps the SEC with a guideline and provides the perfect tool for businesses and financial service companies that are looking to add support for specific e-currencies.  

All parties can now clearly verify the legal status surrounding all major coins. By these classifications, exchanges around the world will know which tokens they should and should not include on their lists for their trade platforms. 

Mary Beth Buchanan of the general council of Kraken has stated that she hopes that the SEC sees this initiative as an acceptable and positive first step towards better regulation of this market place. 


The CRC has implemented a points scaling system this week that can be applied to each cryptocurrency on the market. All coins can be classified between numbers 1 and 5, where the closer an e-currency is rated to towards 5, the more likely it is of being a security. 

When looking briefly over the top contenders in the market, it is made immediately clear that coins such as Bitcoin and Litecoin are not securities, but rather more similar to commodities like Gold or Oil.  

However, a currency like XRP (from Ripple) ranks as a 4, because of their value in the market for international trade. While there seems to be no objection for the classifications of Bitcoin or Litecoin, Ripple owners have argued against their classification as a security and seek a change in status already. 

It seems that the way in which these ratings are helping might just fall in line with current SEC thinking, as the Chairman, Jay Clayton, has in the past said that he does not believe cryptocurrencies like Bitcoin are securities at all but are rather commodities. 

The rating system is still in its infancy and all parties are open to asset issuers giving feedback to help correct any classifications which they might think are incorrect. The CRC is open to making changes based on better information offered from the sources involved. We may see a few ratings change over the next while still. 


The grey areas around Bitcoin and cryptocurrency are long passed being set straight. The market is growing so rapidly and receiving so much attention of late, that it direly needed a move like this to kick start acceptable regulation in the industry that sheds adequate light on all of its ‘shady’ areas. 

Finely balanced regulation is surely possible if crypto specialists get involved in tightening up their own industry. Having the government do all of the legislation in this regards will only lead to heightened frustration. Good communication and a willingness to do this the right way, between exchanges, crypto companies, and regulators, will result in a well-balanced platform from which all parties can work and benefit.