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CoinGecko and 21Shares have proposed a Global Crypto Classification Standard – a classification system representing a uniform method for categorizing crypto assets. The standard is expected to help regulators and investors better understand various types of crypto assets and their unique features.
CoinGecko and 21Shares Seek to Help Investors Understand Distinctions Between Various Crypto Assets
Crypto data aggregator CoinGecko and crypto trading firm 21Shares have teamed up to introduce a worldwide standard for categorizing crypto assets. The two companies have published the Global Crypto Classification Standard report, which proposes a uniform method for classifying crypto assets.
This classification system seeks to improve understanding among investors and regulators regarding the different types of crypto assets, including any potential shortcomings and issues that have emerged in the industry in 2022. At the same time, this method also outlines the taxonomy of the industry and attempts to attract more participants from traditional finance (TradFi).
“Since Bitcoin’s inception around 13 years ago, thousands of unique crypto assets and protocols have emerged, each with unique characteristics and different value propositions.”
– Carlos Gonzalez, a research analyst at 21Shares owner 21.co
Three Key Categorization Levels
At the moment, CoinGecko lists more than 12,000 different crypto assets, each with its unique features and characteristics. The classification system proposed by the two companies is based on three levels of categorization that differentiate these assets concerning stack, market sectors, industries, and taxonomy.
The Global Crypto Classification Standard categorizes crypto assets into three levels. The first level focuses on networks and protocols, including cryptocurrencies, smart contract platforms, and decentralized applications (dApps), among others.
The second level groups the assets based on their industries and sectors, such as centralized finance (CeFi), decentralized finance (DeFi), metaverse, etc. Finally, the third level focuses on the nature of the assets, whether a cryptocurrency, a native token of a specific network, a stablecoin, a derivative token, a governance token, or a utility token, among others.
Essentially, the primary goal of this classification standard is to provide companies and investors with essential insights into a particular network or protocol. Meanwhile, it also strives to help them see any potential issues associated with that project. Last year, several high-profile crypto projects, such as crypto exchange FTX, Celsius Network, and Voyager Digital, collapsed in days, pushing numerous investors away from CeFi platforms.
Do you think the crypto industry is in high need of a classification system? Let us know in the comments below.