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Moody working on crypto stablecoin scoring system

Moody working on crypto stablecoin scoring system

Moody’s is reported to be working on the early implementation of a scoring system for stablecoins, the crypto sector’s most traded tokens, as the asset class grows and faces increased scrutiny from regulators and investors.

Moody working on crypto stablecoin scoring system

The system will include an analysis of up to 20 stablecoins based on the quality of attestations on the reserves backing them, according to a person familiar with the plans.

Despite the current crypto winter brought on by the collapse of FTX (and others) it is clear that the industry in general is preparing for a thawing in the crypto spring, but under the now hawkish eye of the regulators.

Stablecoins are one of the most popular asset classes within the crypto industry. Usually, the digital asset’s value is pegged to a national fiat currency such as the US dollar or another financial instrument like gold.

As its name implies, stablecoins are expected to be less volatile than other types of cryptocurrencies. This does not imply, however, that stablecoins are risk-free.

For instance, Tether, the largest stablecoin issuer, settled with the New York Attorney General’s office in 2021 after allegedly misrepresenting the amount of fiat collateral backing its USDT  coin.

In addition to paying $18.5 million in damages to the state of New York, the company was required to submit periodic disclosures of its reserves.

Whilst a Moody’s rating is far from infallible (you will of course remember the massive shifts in ratings that they were forced to admit during the financial melt down of the banks during 2008-9), a highly regarded ratings agency moving into the crypto world will help to re-establish some balance to the crypto industry at a time when it is desperately needed.


The post Moody working on crypto stablecoin scoring system appeared first on Payments Cards & Mobile.

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