“Likes” are slowly but surely wending their way into the crypto ecosystem. VanEck released a “Bitcoin ETF-like” fund recently.
In partnership with other exchanges and crypto firms, Coinbase launched a token ratings system with several like-minded criteria. Consider the “investment-like language” criteria. Or, the “securities-like language” criteria.
Like, can someone please explain all of CRC’s likes?
The Problem with Likes
Language can be tool for obfuscation or clarity. The use of “like” in CRC’s criteria makes cryptoassets unclear. It is problematic for a couple of reasons.
First, it reinforces ambiguity about an asset class that is already steeped in confusion and derision. How is one supposed to define “investment-like” or “securities-like” language? The CRC does not provide answers.
Second, the use of criteria that approximates an existing definition is strange for an asset that claims to have been born out of a protest against the existing financial ecosystem. Instead of reinventing the wheel, the crypto community seems to have fallen back on using the spokes and alignments of the existing system to wedge their way into it.
Finally, there’s the question of regulation. The CRC’s criteria lead down a path that ends in the Howey test. The cryptocurrency community has been clamoring for new regulation or, at least, evaluation metrics for tokens. When faced with the opportunity to create one, it seems to have folded back on itself and relied on the existing framework. What’s more, use of “like” has further muddied existing definitions.
A Case of Confusing Criteria
The use of “Likes” in CRC’s ratings system is just the tip of problems with the criteria outlined in the ratings system.
Decentralized usage is defined as one of the criteria but its definition is left to the imagination. Is it usage numbers or engagement traction within decentralized platforms? Examples of other “innovative” criteria used for an “innovative” cryptoasset are “Current functionality of the platform” and “Raised funds in excess of what would be necessary for development of the platform”.
In the former case, there is no specification about the types of acceptable functionality. The latter criterion is even more obscure. Does it mean a company that raised funds in excess of its targeted funding amount is good? There have already been several successful ICO scams which have raised funds over and above their target amounts and made away with investor funds.