At a time when EOS is having some problems with the SEC, Litecoin’s creator, Charlie Lee, reiterates on Twitter that Litecoin is not security by sharing the data of the Crypto Rating Council.
— Charlie Lee [LTC⚡] (@SatoshiLite) September 30, 2019
This new tool, set up by some operators and crypto exchanges such as Bittrex, Circle and Kraken, highlights some of the aspects of a cryptocurrency and creates a score, ranging from 1 to 5, following the so-called Howey factor, which allows to understand whether an asset has the characteristics to be defined as a security or not: 1 corresponds to the minimum and 5 the maximum and thus indicates a 99% chance of being a security.
“Each question in the framework is assigned a points-based weighting to reflect its relative importance, the sum of which create scores for each Howey factor. Those scores are then scaled into a final rating between 1 and 5. A score of 5 results when an asset appears to have many characteristics that are consistent with the Howey-test factors. It is probably more likely, relative to lower-scored assets, to implicate the U.S. securities laws. A score of 1 results when an asset appears to have few characteristics that are consistent with the Howey-test factors. It is probably less likely, relative to higher-scored assets, to implicate the U.S. securities laws.”
As can be deduced from the litecoin (LTC) rating, it has the lowest level of risk and it has been pointed out that there is the absence of an ICO and that the development and use are decentralised.
In contrast, if we check the other cryptocurrencies, it is possible to see how there are some that touch only half a point away from the maximum value. Among these, the leading ones are the Maker (MKR) and Polymath (POLY) cryptocurrencies, followed by the controversial XRP, which has a value of 4 out of 5.
Obviously, these parameters are neither official nor immutable, as reiterated by the platform itself, but they can provide a rough idea of the behaviour and performance of a crypto and suggest a judgment on this particular aspect.