INTRODUCTION...3 TOKEN CLASSES...4 TOKEN CATEGORIES...4 TOKEN CLASS DESCRIPTIONS...5 CLASS 1: FUNCTIONAL TOKEN...6 CLASS 2: CRYPTOCURRENCY...

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2 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) CLASS 6: RISKY APPENDIX PARTIAL LIST OF CLASSIFIED TOKENS List of Class 1 Functional Tokens List of Class 2 Cryptocurrencies List of Class 3 Uncategorized Tokens List of Class 4/5 Tokenized Securities PUBLIC COMMENTARY Ethos Token Classification System Page 2

3 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. Ethos Token Classification System Page 3

4 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. Ethos Token Classification System Page 4

5 Token Class Descriptions The Description for each Token class is as follows. Detail on each Class with reference tokens follows. Ethos Token Classification System Page 5

6 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. Ethos Token Classification System Page 6

7 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. Ethos Token Classification System Page 7

8 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. Ethos Token Classification System Page 8

9 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. Ethos Token Classification System Page 9

10 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. Ethos Token Classification System Page 10

11 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. Ethos Token Classification System Page 11

12 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 Ethos Token Classification System Page 12

13 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 Ethos Token Classification System Page 13

14 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 Ethos Token Classification System Page 14

15 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 Ethos Token Classification System Page 15

16 Public Commentary We welcome public comment and input on this document. FOR MORE INFORMATION CONTACT: Ethos Token Classification System Page 17