· ethos token classification system page 3 introduction the market for cryptocurrencies and...

Ethos Token Classification System Effective as revised December 1, 2017 Version 0.31 Draft for Public Commentary

www.ethos.io

http://www.ethos.io/

Ethos Token Classification System

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


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.


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.


Token Class Descriptions The Description for each Token class is as follows.

Detail on each Class with reference tokens follows.


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.


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.


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.


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.


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.


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.


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


List of Class 2 – Cryptocurrencies


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


List of Class 3 – Uncategorized Tokens The following is a partial list of uncategorized tokens.


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


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


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


Public Commentary We welcome public comment and input on this document. FOR MORE INFORMATION CONTACT: [email protected]

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