Risk assessment agency plans to “grade” stablecoins

Risk assessment agency Moody's  which gives grades to investments, companies and countries is planning to develop a scoring system that also presents a score for stablecoins, according to a report by the Bloomberg news agency published this Friday (27)

According to Bloomberg, Moody's analysis would take into account the quality of reserves and backing of the companies issuing the tokens

The scoring system should include up to 20 stablecoins,

 Analyzing the quality of proof of reserves and ballasts of each cryptocurrency issuer.

Stablecoins — which are cryptocurrencies intended to be traded at a value pegged to a non-digital asset such as the US dollar or gold — are the most traded crypto asset on the market, with a trading volume of $7.9 trillion in 2022 .

Reached by Decrypt for comment on the news, Moody's did not respond to requests.

Stablecoins and regulations

After the catastrophic failure of project Terra, which was founded on the algorithmic stablecoin UST, regulators are taking a closer look at the stablecoin market in light of Moody's scoring system.

In October 2022, President Martin Gruenberg of the Federal Deposit Insurance Corporation (FDIC) stated that "all payment stablecoin issuers should – like banks, whether federal or state – be subject to proper regulation and supervision."

In recent years, market leaders Tether and Circle have also expanded, reaching a combined market capitalization of more than $100 billion.

The reserves of a variety of traditional financial assets and other cryptocurrencies are used to back the stablecoins issued by these businesses, USDT and USDC, respectively.

USDT, the largest stablecoin on the market with a $67 billion market capitalization, has had issues in the past with investor confidence and transparency.

Even though Tether has recently taken steps to allay regulatory concerns and investor doubts, the company was even assessed a $41 million penalty in 2021 for lying about its dollar holdings.

*With Decrypt's permission, Gustavo Martins translated the text.

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