Amid Bitcoin craze, Weiss Ratings launches cryptocurrency grades

Jan. 17--Weiss Ratings, the Palm Beach Gardens company known for grading banks, insurers and stocks, is adding a new subject to its report card: cryptocurrency.

Weiss Ratings said Wednesday that it will release letter grades for Bitcoin, Ethereum and dozens of other cryptocurrencies on Jan. 24.

Weiss Ratings is best known for a cautious approach to investing, and founder Martin Weiss acknowledges that grading cryptocurrencies represents "a departure."

He says he's not advising investors whether to include cryptocurrencies as part of their portfolios. Rather, he wants to offer objective advice.

"Weiss Ratings has always stood for prudent investing," Weiss said Wednesday in an interview. "The average investor needs the prudence and guidance that a solid rating can provide. If you want to want to invest in cryptocurrencies, you need to do so based on fact, not fiction."

Analyzing the new breed of money isn't easy, considering that cryptocurrencies' prices are volatile and the underlying blockchain technology is so new.

"This is a very specialized field," Weiss said.

Weiss says on its site that its grades are based on "a groundbreaking model that analyzes thousands of data points on each coin's technology, usage, and trading patterns."

A partial list of the cryptocurrencies Weiss will grade: Bitcoin, Ethereum, Ripple, Bitcoin Cash, Cardano, NEM, Litecoin, Stellar, EOS, IOTA, Dash, NEO, TRON, Monero and Bitcoin Gold.

Weiss says the big rating agencies won't bother to rate virtual currencies because the issuers won't pay them to do so.

And while some have compared virtual currencies to gold, Weiss doesn't buy the analogy.

"Cyrptocurrency and gold are miles and miles apart," Weiss said. "Gold is the ultimate in solids and tangibles and antiquities. Cryptocurrency is the ultimate in looking to the future."

Also Wednesday, the Florida Office of Financial Regulation issued a consumer alert about virtual money, which it labeled an "emerging investor threat":

--"Cryptocurrency is subject to minimal regulatory oversight, susceptible to cybersecurity breaches or hacks, and there may be no recourse should the cryptocurrency disappear.

--"Cryptocurrency accounts are not insured by the Federal Deposit Insurance Corp., which insures bank deposits up to $250,000.

--"The high volatility of cryptocurrency investments makes them unsuitable for most investors.

--"Investors in cryptocurrency are highly reliant upon unregulated companies, including some that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.

--"Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect purchased cryptocurrencies from theft."

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