Fitch Ratings, Standard & Poor’s or even Moody’s are making rain and shine in the world of cryptoassets. Indeed, these credit rating giants are said to hold 90% of the global stablecoin market share. To this end, they would have undertaken to develop a rating system for crypto-currencies attached to other assets. The initiative is part of the work of regulating stablecoins. However, regulators and other Stablecoin enthusiasts do not hide their concerns about the use or not of stablecoins.
US credit rating giants want to revolutionize the stablecoin industry
Amid growing interest in stablecoins, the credit rating titan, Moody’s has set up a system capable of analyzing up to 20 stablecoins. These analyzes are carried out according to the quality of the certificates of the reserves on which these Stablecoins are backed.
Moreover, this situation raises the concern of regulators and investors who require Stablecoin issuers to publish reserve attestation reports. Which must be certified by third-party auditing firms that ensure that each unit of stablecoins is backed by reserves.
Note that in 2021, for having lied about its reserves, Tether, the issuer of the largest Stablecoin by market capitalization, had suffered a severe fine of $41 million.
Additionally, a source with knowledge of Moody’s stablecoin rating system reportedly claimed that the project is still in its infancy and will not represent an official credit rating in any way.
However, this project comes at the right time in view of the many crashes and collapses observed recently on the Blockchain. We still remember the Terra project which was born in 2018 and experienced an unprecedented crash in May 2022. This collapse is also linked to the fall of its algorithmic Stablecoin. As a result, the price of Terra (Luna) suffered a depreciation after TerraUSD (UST) failed to maintain its peg to the US dollar.
Exposed during the “subprime” crisis that rocked the world economy in 2007, credit rating agencies have since been trying to restore their image. Thus, giants such as Moody’s set out to develop a system capable of analyzing stablecoins. This saving measure comes at a time when stablecoin bills abound in many countries.
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