The chief legal counsel at major United States digital wallet and platform Coinbase, Brian Brooks has just responded to the worries and conflicts of interest which could impact the firm’s newly formed Crypto Ratings Council.
Speaking in an interview earlier this week, Brooks addressed the critics who claimed the council’s compliance guidance which could be affected by the private stakes of those involved.
In the past, the Coinbase platform has clarified that the results brought forth by the council are designed to serve as a “scalable, points-based rating system,” drawing upon yes-no questions formulated on the basis of the United States Securities and Exchange Commission (SEC) guidance for classification.
In part of the interview, Brooks said that the ratings from the council are emphatically not legal advice, stating:
“This is essentially an automated compliance tool, of which there are many in the financial services world. Think Hummingbird for AML compliance, or Fair Lending Wiz for fair lending compliance. No one thinks those tools represent the practice of law. And this certainly doesn’t constitute investment advice – we’re not rating the quality or value of assets, only their status as a security or not.”
Tyler Gellasch, the executive director at Healthy Markets, (and former counsel to SEC Commissioner Kara M. Stein) is just one industry participant that have raised further worries.
Gellasch said that council members may have a stake in the assets that they are overlooking and could result in a biased result...
“A group of private companies jointly declaring how they think things that directly impact their bottom lines should be regulated isn’t likely to be all that persuasive to regulators or investors.”
Brooks denied such a suggestion and said that many of the assets under evaluation have already been rated 5 - meaning they are highly likely to be classed as a security. He said:
“The point is to get clarity, not justify listing assets that wind up being deemed unregistered securities.”
It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!