• Moody’s Corp., an integrated risk assessment firm, will start looking at how it can ascertain the risk and health of stablecoins.
• Moody’s scoring system will have an analysis of up to 20 stablecoins, which be based on the quality of attestations on their reserves.
• Moody’s stablecoin scoring project is still in an early phase, and the score would not be equivalent to an official credit rating.
Moody’s Corporation, an integrated risk assessment firm, is set to begin evaluating the risk and health of stablecoins. The company’s arm, Moody’s Investors Service, specializes in providing credit ratings for businesses across various industries, including publicly traded crypto companies.
The need to rate stablecoins comes amidst renewed pressure from governments and regulators around the world. To that end, Moody’s is looking to create a scoring system for stablecoins that will have an analysis of up to 20 stablecoins, based on the quality of attestations on their reserves. A source close to the company’s plans told Bloomberg News that this scoring system is still in its early stages, and that the score will not be equivalent to an official credit rating.
The two main types of stablecoins are algorithmic and collateral. Algorithmic stablecoins use a complex set of algorithms and smart contracts to maintain their value, while collateral stablecoins are backed by a reserve of fiat currency or other assets. Both types of stablecoins are designed to maintain a stable value, usually pegged to a fiat currency like the US dollar.
Moody’s stablecoin scoring system is a step forward in the world of cryptocurrency, as it provides an objective measure of the health of different stablecoins. The rating system also helps to increase trust and transparency in the industry, as well as provide insight into the potential risks associated with different stablecoins.
It remains to be seen how Moody’s scoring system will be received by the crypto community, but it is a promising development for the future of cryptocurrency. It is likely that other rating agencies will follow suit and create their own rating systems for stablecoins in the near future. Ultimately, the rating system will be beneficial for the industry as a whole, providing investors with the information they need to make informed decisions.