Today in the cryptocurrency world, the SEC announced they would increase their agencies commitment to the cryptocurrency industry and heighten their motorization of said industry. This decision was in large part due to the growing fraudulent activities that have left a bad stain in the early adoption of the cryptocurrency industry. This statement follows the statement made yesterday from the South Korean Government as they wanted to create more regulations for cryptocurrencies as there are not enough protections in place to safeguard individuals.
While the SEC is looking into creating more protectionary regulations, the CFTC (Commodity and Futures Trading Commission) sees cryptocurrency as commodities and has brought up legal cases to sue fraudulent cryptocurrency schemes. Hopefully continued support and regulatory oversight will help ensure the success of the cryptocurrency industry and keep individuals safe in their investments and use of cryptos within the markets. One thing I found interesting is that the SEC earlier last year in July made an announcement that they might consider ICOs as securities. This grabbed my attention as the CFTC see the cryptos as being commodities and take action within the market as if they are. Are we going to see agencies label cryptocurrencies as anything they want so that they can have jurisdiction over them or will we see a new agency form to regulate the marketplace instead.
Another interesting article I found talked about the first ratings of cryptocurrencies by Weiss Ratings. When they released their ratings of cryptocurrencies, it sparked a lot of outrage as they had major players like Bitcoin graded at a C+ while other cryptos like Ethereum received a B. While Weiss is not as popular as other rating companies like Standard and Poor’s or Moody’s, they did issue a statement that they do not accept compensation from companies it rates as to keep away from collusion. Out of the 74 cryptocurrencies the agency rated, none of them received an excellent A rating. Due to the overall low ratings, Weiss received a lot of hate from cryptocurrency investors as they feared the poor ratings would affect the cryptocurrency markets and have a negative affect on their price.
There was so much anger towards Weiss, that they were apparently hacked by a South Korean hacker which broke into their site and took information from their ratings system and distributed distorted data around the social media platforms. Weiss came out with a statement,
“Urgent consumer alert: Beware of fake cryptocurrency ratings posted on Twitter accounts and the Internet. The only true Weiss Cryptocurrency Ratings are at weisscryptocurrencyratings.com”
Weiss argues that their ratings of the cryptocurrency industry does not harm the industry for giving poor reviews but instead is helping the process of institutionalizing the industry. There are worries surrounding the ratings system as people have been responding to their poor ratings of Bitcoin as they do not understand the core values of Bitcoin. While this might be true, their reasoning behind the poor grade is something I have heard for a long while as Bitcoin has gotten a lot of bad press for their long delays and high transaction costs.
Weiss went even further to explain their reasoning behind the cryptocurrency ratings. The first was that they do not use the standard rating system seen throughout the financial world where there is AAA, AA, A… Instead Weiss uses a standard A, B, C for their grading system in which A is very good B is good and C is fair. In addition to this explanation to their ratings system they clarified that they see no cryptocurrency as being “safe” as they are all subject to extreme volatility.
The model Weiss uses for the ratings system is as seen below:
The Weiss Cryptocurrency Ratings model is built from the ground up with five basic layers:
Layer 1. Current data on each currency’s technology, performance and trading trends
Layer 2. Proprietary formulas that convert the data into comparable ratios.
Level 3. Proprietary sub-indexes that aggregate the ratios to measure key factors and features considered critical to the potential success or failure of investments in each cryptocurrency
Level 4. Aggregation of the sub-indexes into four key indexes, each meriting a separate letter grade
Level 5. Aggregation of the four key indexes into an overall letter grade
Thus, each Weiss Cryptocurrency Rating represents the pinnacle of a pyramid built from tens of thousands of calculations that feed up to a final grade.
source. https://weisscryptocurrencyratings.com/ratings/the-weiss-cryptocurrency-ratings-explained-15
While the ratings are for purchase at
https://weisscryptocurrencyratings.com/
I have found what seems to be a leaked copy of their ratings
http://moonnocoin.com/weissratings-sokuhou/Weiss-Cryptocurrency-Ratings.pdf