Coffee&Coin - Issue #6 - Dying Unicorns, Rating Councils, and $5 in Free MANA Tokens

September 30th

Sep 30, 2019

Giveaway:

Coffee&Coin has partnered with the team at Decentraland to give each user 200 MANA ($5) to help them claim their own free avatar name (which costs 100 MANA) in Decentraland’s virtual world on a blockchain.

Learn how to claim your tokens on our Reddit post >>>

Kik Shoots a Unicorn to Save a Token:

Common readers will know I have no love-loss for Kik/Kin. In the beginning, I was a huge advocate for the Kin token, as it represents a solution that is sorely needed in the industry, and Kik, a $1B+ startup with hundreds of millions of registered users was willing to stake their app on the line for it. [Read the Full Article >>>>]

Coinbase Rating Council:

In a company blog post this week, Coinbase announced they are partnering with Anchorage, Bittrex, Circle, DRW Cumberland, Genesis, Grayscale Investments and Kraken to create a "Crypto Ratings Council" which takes aim at providing a standardized framework for scoring crypto assets, on a scale of 1-5, with how similar they are to a US Security under the Howey Test.

The Crypto Ratings Council (CRC) notes that all analysis is done by independent legal experts and technical experts on their staff, and that none of the scores are endorsed by any US authority like the SEC.

So far the CRC has given high "similar to security" scores to MKR (4.50), POLY (4.50), XRP (4.0), suggesting that these assets are very similar to securities.

The problem with this, is that many of these assets that are very similar to securities such as XRP or MKR are offered by members of the CRC (such as Coinbase and Kraken) to the general public in the US. This means, that these exchanges have either received guidance or have strong enough in-house council belief, that these assets are not a security that they can feel safe in offering them.

If Coinbase, et al, believed in these ratings then they simply wouldn’t be offering some of these assets to the general public. The only thing this stands to do is creating a chilling effect around the industry where small startups and independent developers choose not to work with certain assets due to the risk that it "is similar to a security" and they don’t have Coinbase level lawyers to protect them in those dealings.

Coinbase’s Chief-Legal-Office had touted this idea a few years back at a conference in DC and the idea was met with resistance from the community in fear of creating a centralized cabal of businesses who could abuse ratings to keep out new market entrants.

Its hard to see what value is provided from the CRC, but, its clear to see how it lets these businesses create a new walled garden.

Adam Cochran

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