CoinGecko and 21Shares recently released a report document on policy and classification standards to bridge the gap between policy makers and digital asset investors. Dubbed "The Global Crypto Classification Standard," the document provides a brief overview of the crypto industry and its often complicated terms and taxonomies.
The research document is designed to provide clear definitions of crypto assets, enabling policy makers to make informed decisions if one were to navigate the burgeoning crypto and digital asset space. The document is also available for download and perusal on the CoinGecko website.
CoinGecko is an independent crypto data aggregator, market intelligence, and analytics platform which provides comprehensive information for its users, including updated (and on certain points, real-time) data on cryptocurrency price, trade volumes, market capitalization, and other statistics relevant to investment decisions. 21Shares, on the other hand, is currently the industry's foremost issuer of ETPs (crypto exchange-traded products), a suite of financial products tied to crypto exchanges. Notably, 21Shares is a subsidiary of 21.co, founded by Ophelia Snyder and Hany Rashwan. 21.co is advised by Cathie Wood, CEO of Ark Invest, an investment management firm.
While the report aims to propose a standardization of the taxonomies for the crypto market, its makers have posted a disclaimer that they do not "guarantee the accuracy or completeness" of the report. This writer, for instance, has noticed several incongruencies in the document, in particular with the classifications for infrastructure-oriented Layer 2 solutions such as Polygon and Solana.
The methodology behind the research work is particularly interesting. It deviates from traditional financial systems (TradFi) and classifications in that it proposes a non-linear variance between crypto assets and other use case offshoots that have bloomed off of these. The methodology introduces three "levels" of categorization, but also fails to define the areas where certain distinctions become blurred because of overlapping functionalities.
The document does not go on to fully define what "general purpose" blockchains are, nor does it provide a differentiation between what they mean by "distributed machine states" and how "virtual machines" actually work, specifically if they are built based on DLTs (distributed ledger technologies) such as blockchains. There are also several typographic errors such as on page 8 of the document, where it misspells "programmability" on the section for Smart Contract Platforms.
The document forms a great visual overview of how crypto has evolved in the past decade since its inception, and it's a laudable effort at that. This would be helpful for first-time investors, journalists, and corporate researchers trying to get a foothold into the crypto industry.
"Crypto is still in the early days – but it is key to have a standard way to classify the asset class so investors can understand both the commonalities and differences between the various assets," shares Eliézer Ndinga, Director of Research at 21.co.
Perhaps most importantly, this document will help regulators and policymakers get a solid understanding of how far the crypto industry has evolved. The section classifying "Meme Tokens" as an asset class is particularly helpful, especially given the proliferation of scams and rug pulls across the industry. The Crypto and Web3 space is expanding at an exponential rate, with a trillion-dollar economy pushing it forth. Initiatives such as these are most welcome.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. Opinions stated herein are solely of the author's, and hence do not represent or reflect CryptoDaily's position on the matter. The author has no stakes in any of the digital assets and securities mentioned, and does not have any significant hold of own any cryptocurrency or token discussed.