Moody’s Corporation has turned its attention to the stablecoins for which it is developing a scoring system. According to the 26th of January report from Bloomberg, Moody’s Corporation is planning to develop a scoring system for stablecoins for more than 20 cryptocurrencies. This new scoring system will analyze the quality of every twenty cryptocurrencies’ attestation. However, this scoring system will not work as the official credit rating system.
Stablecoins are basically cryptocurrencies intended to trade at an equal value to a non-digital asset, such as gold or the US dollar. Stablecoins are the most traded crypto assets in the market, as in 2022, the trading volume of stablecoin was around $7.9 trillion. This new scoring system from Moody’s Corporation comes at a time when financial regulators are taking a deep look at the stablecoin market, which is due to the collapse of Terra’s stablecoin in May 2022.
Last October, Martin Gruenberg, the chairman of FDIC, well-known as the Federal Deposit Insurance Corporation, said that all payment stablecoin issuers should be subject to oversight and prudential regulation. The stablecoin issuers should be just like banks, such as Federal or state-chartered. Over the past several years, Circle and Tether, which are market leaders in stablecoins, have also increased. Over this period, both of them cumulatively hit a market capitalization of over $100 billion.
Tether’s USDT and Circle’s USDC are both supported by reserves in a wide range of traditional financial assets. According to the 27th of January report from Decrypt, a spokesperson from Circle told that It’s a positive sign that an independent rating company looks at the importance of scrutinizing whether stablecoins payments live up to their name as of being stable, transparent, and well-managed. However, USDT, which is the largest stablecoin with a market cap value of around $67 billion, had a checkered past with investor confidence and transparency.
Regarding Moody’s scoring system, a spokesperson from Tether said that this move could bring more security, privacy, and confidentiality to crypto investors.