The Crypto Rating Council launched the new rating scale, which catalogs the characteristics of certain cryptocurrencies, based on the Howey Test—a four-part analysis used to determined when an instrument or asset is considered an “investment contract,” and in turn, a security—according to information from the council.

“The digital asset analysis Framework reflects an effort by the Council to apply existing case law and guidance published by the [Securities and Exchange Commission] in a systematic and objective way to the different prongs of the Howey test, weight dozens of different factors, and apply a scaling methodology to arrive at a score on a 5 point scale,” according to the group. “Understanding that there may be greater or fewer factors present is intended to be a tool to help members make individual determinations of the potential legal classification of a given asset, but the score is not dispositive.”

The “Howey Test has four components, according to the group. They are:

• An investment of money
• In a common enterprise
• With an expectation of profit
• Solely from the effort of others

Under the scale, a score of 1 means an asset has almost no characteristics like those of a security. With a score of 5, the analysis found many characteristics “strongly consistent” with those of a security. For example, Bitcoin (BTC) was given a 1.00, as it has an “absence of a marketed token sale and corresponding marketing efforts; decentralized development and usage; [and] anonymity of the Project Team.” On the other hand, Polymath (POLY) scored a 4.50 because of the “sale of tokens or token interests prior to the existence of token utility; limited amount of current utility; [and] limited decentralized development and usage of the platform.”

According to the council, it is committed to the “responsible growth and maturation of cryptocurrency markets and related financial infrastructure and trading services.” The founding groups of the council are:

• Anchorage
• Bittrex
• Circle
• Coinbase
• Cumberland
• Genesis
• Grayscale
• Kraken

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The Council did warn, though, the score is explicitly not a legal determination. None of its work has been endorsed by the SEC or other regulatory agency. “The Framework does not create any new law or policy, and ultimate authority to determine what may or may not be a security remains with the courts,” according to the group. “Scores are used by members of the Council as a reference point.”

For a comprehensive look at cryptocurrency regulations around the world, visit the Library of Congress.

“The past four years have seen cryptocurrencies become ubiquitous, prompting more national and regional authorities to grapple with their regulation,” reads the report. “The expansive growth of cryptocurrencies makes it possible to identify emerging patterns.”