Moody’s Corp, a financial leader, is creating a scoring system for up to 20 stablecoins. The scores will evaluate the quality of reserve attestations, per Bloomberg (Jan 26)
Bloomberg reported (citing a source) that Moody’s stablecoin scoring system is in the early stages, not an official credit rating. Stablecoins are popular crypto assets with value tied to a fiat currency or financial instrument, and they’re expected to be less volatile than other crypto assets.
After TerraUSD’s collapse in 2022, stablecoin issuers are under increased scrutiny from regulators for reserve quality. Moreover, IMF research paper emphasized the importance of quality & liquid stablecoin reserves for stability & potential for widespread acceptance as credible means of exchange.
U.S. regulators warn of dangers of unregulated stablecoins, with FDIC’s acting chairman advising strict measures for issuers. Furthermore, the IMF backed Gruenberg’s perspective by stating that stablecoin issuers must meet strict financial standards.
Tether USDT, the biggest stablecoin, has faced criticism from regulators and the community due to unclear reserves. The company settled with N.Y. Attorney General for false representation in 2021 and faced a mini bank run during Terra’s collapse with $10 billion in withdrawals.
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Despite the scrutiny, stablecoin usage has risen globally. Tether processed $18.2T in 2022 transactions, surpassing Visa and Mastercard. People in struggling economies often use stablecoins for savings and transactions.
2022 Settlement Volume