Ethos Token Classification System Effective as revised December 1, 2017 Version 0.31 Draft for Public Commentary
www.ethos.io
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CONTENTS
INTRODUCTION .....................................................................................................................3
Consumer Protection .......................................................................................................... 3
Token Classification Method ................................................................................................ 3
TOKEN CLASSES .....................................................................................................................4
TOKEN CATEGORIES ...............................................................................................................4
TOKEN CLASS DESCRIPTIONS ..................................................................................................5
CLASS 1: FUNCTIONAL TOKEN .................................................................................................6
CLASS 2: CRYPTOCURRENCY ...................................................................................................7
CLASS 3: UNCATEGORIZED......................................................................................................8
CLASS 4: TOKENIZED SECURITY (REGISTERED) .........................................................................9
CLASS 5: TOKENIZED SECURITY (UNVERIFIED) ....................................................................... 10
CLASS 6: RISKY ..................................................................................................................... 11
APPENDIX – PARTIAL LIST OF CLASSIFIED TOKENS ................................................................. 12
List of Class 1 – Functional Tokens ...................................................................................... 12
List of Class 2 – Cryptocurrencies ....................................................................................... 13
List of Class 3 – Uncategorized Tokens ............................................................................... 14
List of Class 4/5 – Tokenized Securities ............................................................................... 16
PUBLIC COMMENTARY ......................................................................................................... 17
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Introduction The market for cryptocurrencies and tokens has exploded. The cryptocurrency space got its start with Bitcoin, a decentralized peer-to-peer cryptocurrency. Then Ethereum created a functional token, Ether that acts as “gas” to a decentralized computer operating system. Many other tokens followed. A dynamic, rapidly-growing market to buy, sell and trade cryptocurrencies and tokens has been the result. There are now thousands of tokens. And a myriad of token offerings, often known as an “ICO.” While there is huge public interest and demand for cryptocurrencies and tokens, there is little knowledge and structure to classify and organize tokens. The names that label tokens are largely organic and unstandardized.
Consumer Protection There is no industry or regulatory framework for cryptocurrencies and tokens. While there are many vital and legitimate tokens and cryptocurrencies that promise a new, brighter future, there are offerings that range from questionable to fraudulent. Consumer protection begins with education, and our hope is to provide a framework that can be used by industry, regulators and consumers to appropriate organize and categorize cryptocurrency and token offerings.
Token Classification Method The Ethos classification system initially classifies cryptocurrencies and tokens based on the enclosed set of standards and criteria. Moving forward, new tokens will be classified as “Uncategorized” until Ethos or a participating authorized body has categorized the token.
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Token Classes 6 Classes of Tokens and Cryptocurrencies have been established for this rating system. Here they are in table form.
Token Categories In addition, tokens are given a category depending on their functional role in the crypto and blockchain ecosystem such as Infrastructure, Platform, Media, Fog Computing or Gaming.
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Token Class Descriptions The Description for each Token class is as follows.
Detail on each Class with reference tokens follows.
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Class 1: Functional Token
A functional token is designed to provide access to a platform. The best-known functional token is Ethereum, which operates Smart Contracts that are powered by the Ether token, commonly known as “gas.” Other tokens leverage a similar concept, enabling a small fee to be paid or collected for functional access to a platform. A functional token also enables a value ecosystem in which participants can earn tokens for providing value to the network. Examples of this include staking, work and contributions. Many projects fund development through leveraging a functional token. However, in order the be a functional token, users should not have a reasonable expectation of a profit from the token itself or see the token as an investment vehicle.
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Class 2: Cryptocurrency
A cryptocurrency uses encryption techniques to regulate the generation of units of currency, typically operating independently of a central bank. It can often be widely exchanged for goods or services. Usually the emission of new coins is highly regulated, and can be controlled by mining, proof of work or proof of stake. Many governments consider cryptocurrencies to be commodities or property. The best-known cryptocurrency is Bitcoin, but there are many others. Most cryptocurrencies have open ledgers eg “chains” capturing all transactions, which is very useful to combat issues like money laundering and terrorist financing. While many enthusiasts consider Cryptocurrencies to be an alternate form of money, taxation authorities such as the Internal Revenue Service consider cryptocurrencies to be a form of property.
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Class 3: Uncategorized
A token is considered to be Class 3 token if it has not yet been put into another category due to it not having been researched or processed. This is the default Class for new tokens that enter into the Ethos database.
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Class 4: Tokenized Security (Registered)
A token is considered to be a Tokenized Security in a variety of circumstances. If they represent equity or ownership in a corporation, then the tokens can be considered tokenized “shares.” A token can be considered a “share” if token holders are given the right to receive dividends, participate in governance or participate in a corporation’s surplus assets upon winding down. If the token is designed to provide token holders with a share of the returns generated from a project, then it is also a security. An example of this would be a “tokenized fund” such as a venture capital or investment fund. A token can also be considered a Tokenized Security if they are used to create or acknowledge a debt or liability owed by the issuer. If a token holder is paid principal with or without interest from the issuer, then they would be considered a debenture, which is an unsecured loan certificate that is backed essentially by credit, not assets. A token is considered to be Class 4 if it exhibits the above characteristics and has registered with regulatory bodies such as the SEC (Securities and Exchange Commission), ESMA (European Securities and Markets Authority) , MAS (Monetary Authority of Singapore), CSRC (China Securities and Regulatory Commission), SFC (Securities and Futures Commission of Hong Kong), or similar entities.
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Class 5: Tokenized Security (Unverified)
A token is considered to be Class 5 if it exhibits characteristics of a security, but does not have evidence of having been registered with a regulatory body. There is a short list of tokens that can be considered to be Tokenized Securities in either Class 4 or Class 5. A token will assumed to be Class 5 by default unless it has documentation to prove otherwise.
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Class 6: Risky
A token is considered to be Class 6 if it is a known scam, Ponzi or if the operators are not publicly known. Amazingly, many tokens that are known scams still remained actively traded. The reasons these risky tokens are still circulated are unknown. Possible reasons include a lack of public information or a willingness to absorb the inherent risk. This Class will be used sparingly, but it is also important that clearly fraudulent token operators are properly categorized as a way to inform users of their status.
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Appendix – Partial List of Classified Tokens Note this is far from a complete list. Ethos will be investing resources in maintaining and making available a complete database to the blockchain and cryptocurrency ecosystem.
List of Class 1 – Functional Tokens Here is a partial list of the best-known functional tokens:
Name Symbol Classification Category
Ethereum ETH Functional Token Infrastructure
NEO NEO Functional Token Infrastructure
OmiseGO OMG Functional Token Platform
Qtum QTUM Functional Token Platform
Stratis STRAT Functional Token Infrastructure
Waves WAVES Functional Token Infrastructure
EOS EOS Functional Token Infrastructure
Ethereum Classic ETC Functional Token Infrastructure
Steem STEEM Functional Token Media
MaidSafeCoin MAID Functional Token Fog Computing
Golem GNT Functional Token Fog Computing
Augur REP Functional Token Prediction
Basic Attention Token BAT Functional Token Media
Factom FCT Functional Token Platform
Siacoin SC Functional Token Fog Computing
Civic CVC Functional Token Platform
FunFair FUN Functional Token Gaming
Gas GAS Functional Token Platform
Status SNT Functional Token Platform
Ox ZRX Functional Token Infrastructure
Aragon ANT Functional Token Platform
Edgeless EDG Functional Token Gaming
CoinDash CDT Functional Token Platform
district0x DNT Functional Token Platform
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List of Class 2 – Cryptocurrencies
Name Symbol Classification Category
Bitcoin BTC Cryptocurrency Digital Asset
Litecoin LTC Cryptocurrency Digital Asset
Monero XMR Cryptocurrency Privacy
NEM XEM Cryptocurrency Digital Asset
Ripple XRP Cryptocurrency Platform
Bitcoin Cash BCH Cryptocurrency Digital Asset
Dash DASH Cryptocurrency Governance
Hshare HSR Cryptocurrency Governance
IOTA IOTA Cryptocurrency Platform
Zcash ZEC Cryptocurrency Privacy
Bytecoin BCN Cryptocurrency Privacy
Stellar Lumens XLM
Cryptocurrency Platform
Tether USDT Cryptocurrency Digital Asset
Dogecoin DOGE Cryptocurrency Meme
DigiByte DGB Cryptocurrency Platform
Ark ARK Cryptocurrency Digital Asset
Decred DCR Cryptocurrency Governance
PIVX PIVX Cryptocurrency Privacy
DigixDAO DGD Cryptocurrency Digital Asset
GameCredits GAME Cryptocurrency Gaming
BitcoinDark BTCD Cryptocurrency Digital Asset
Verge XVG Cryptocurrency Privacy
ReddCoin RDD Cryptocurrency Digital Asset
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List of Class 3 – Uncategorized Tokens The following is a partial list of uncategorized tokens.
Name Symbol Classification Category
BitConnect BCC Uncategorized Platform
Lisk LSK Uncategorized Infrastructure
BitShares BTS Uncategorized Infrastructure
Metal MTL Uncategorized Platform
Binance Coin BNB Uncategorized Platform
Byteball GBYTE Uncategorized Digital Asset
MCAP MCAP Uncategorized Security
Ardor ARDR Uncategorized Infrastructure
Blocknet BLOCK Uncategorized Infrastructure
Bancor BNT Uncategorized Platform
Gnosis GNO Uncategorized Prediction
GXShares GXS Uncategorized Platform
Komodo KMD Uncategorized Platform
Nexus NXS Uncategorized Digital Asset
Populous PPT Uncategorized Platform
Veritaseum VERI Uncategorized Platform
Bytom BTM Uncategorized Platform
Cofound.it CFI Uncategorized Platform
DECENT DCT Uncategorized Media
Metaverse ETP ETP Uncategorized Infrastructure
Lykke LKK Uncategorized Platform
MobileGo MGO Uncategorized Gaming
NAV Coin NAV Uncategorized Digital Asset
NoLimitCoin NLC2 Uncategorized Gaming
Nxt NXT Uncategorized Infrastructure
Particl PART Uncategorized Platform
iExec RLC RLC Uncategorized Fog
Computing
SingularDTV SNGLS Uncategorized Media
Storj STORJ Uncategorized Fog
Computing
Syscoin SYS Uncategorized Platform
Tierion TNT Uncategorized Platform
Ubiq UBQ Uncategorized Platform
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Elastic XEL Uncategorized Fog
Computing
FirstBlood 1ST Uncategorized Gaming
AdEx ADX Uncategorized Media
Emercoin EMC Uncategorized Platform
FirstCoin FRST Uncategorized Platform
ICO ICO Uncategorized Dead Coin
I/O Coin IOC Uncategorized Infrastructure
LEOCoin LEO Uncategorized Platform
Melon MLN Uncategorized Platform
Gulden NLG Uncategorized Digital Asset
Pillar PLR Uncategorized Platform
Peercoin PPC Uncategorized Digital Asset
Quantum Resistant Ledger QRL
Uncategorized Digital Asset
Rise RISE Uncategorized Platform
TokenCard TKN Uncategorized Platform
Asch XAS Uncategorized Platform
CounterParty XCP Uncategorized Platform
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List of Class 4/5 – Tokenized Securities
COIN ID Name Symbol Classification
TenX PAY TOKENIZED SECURITY (Unverified) Security
Iconomi ICN TOKENIZED SECURITY (Unverified) Security
Monaco MCO TOKENIZED SECURITY (Unverified) Security
Wings WINGS TOKENIZED SECURITY (Unverified) Security
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Public Commentary We welcome public comment and input on this document. FOR MORE INFORMATION CONTACT: [email protected]