Thread by @msantoriESQ

1/ Today, a group of exchanges and custodians got together to fill a gap left by US laws. It's the Crypto Ratings Council. Here's a short thread to tell you what to think about it. Don't you dare think differently.

2/ The goal of the council is apparently to create a Hot or Not for the Howey Test. The Council will take notice of your crypto and publicly rate it, according to a proprietary framework, on a scale of likelihood of security status. Whether you want it to or not.

3/ Let's dive into the framework.

wait there is no framework.

4/ It's just a series of legal conclusions, devoid of reasoning. A scattershot blast of facts aimed haphazardly out of Howie's four short barrels.

5/ Sure, it draws on the right stuff: pre-functional tokens are likely to be securities (SAFT Framework); tokens sold like investments are likely to be securities (manner of sale analysis)

6/ But, I mean, it jumbles them together a bit, and three bullet points doesn't make for a very compelling argument against a complex fact-based standard that can cost its subject tens of millions of dollars.

7/ Worse, the Council consists of many of the major custodians: Kraken, Coinbase, Circle, etc. who do business in the US. These mostly hollow ratings are very likely to be persuasive across the industry. A powerful black mark on your asset, or an undeserved seal of approval.

8/ So why on earth would they publish this? Why on earth should we applaud their effort?

Well, actually we should.

As an industry, this stuff is basically the best we've got.

THAT'S RIGHT ITS A TWIST

wait hear me out.

9/ An overwhelming amount of time and money is wasted every day by crypto projects and by the infrastructure providers (exchanges, custodians, etc) that support them - just to figure out whether they'll get sued for doing so.

10/ Congress can't seem to help. Making new laws is not something they're good at these days, especially for a contentious industry full of stakeholder adversity.

11/ SEC can't seem to help. On one side they're stuck with the existing laws, which are too ambiguous to offer meaningful guidance. On the other, besieged by negative headlines no matter the direction they choose. Anyway, their job isn't "helping"; it's investor protection.

12/ So what's left? Industry efforts to self-regulate.

But this is not an industry for which self-regulation comes naturally.

13/ In this light, as another lawyer just put it to me, the CRC is "a case study in creating community from contrarians."

14/ Can the industry do better? Absolutely and without a doubt. We could compromise with each other on important issues and present unified, robust policy positions to governments. Change policy directly.

Are we doing this? Nope, not today. Not effectively enough, at least.

15/ Admirable efforts exist. Outstanding, actually: Coin Center, the Blockchain Association come to mind.

16/ But fundamental change is slow. Today, what's our solution?

Hot or Not for Howey

17/

Transunion for Tokens

18/

IIROC for Innovation

19/

SIFMA for Satoshi

20/ Traditionally I keep this going to 21 tweets but I'm obviously atrocious at this wordplay stuff so someone please reply here with "21/*" where * is your more clever name for the CRC please and thank you.