Moody’s Corporation, a prominent financial organization, is reportedly operating on a scoring system covering nearly 20 stablecoins. The respective project will be focused on evaluating the quality of the stablecoins’ reserves attestation, as reported by Bloomberg.
The news outlet cited the person acquainted with the issue and reported that currently, the respective scoring system is going through its initial stage.
Moody’s to Release a Stablecoin-Centered Scoring System
Nowadays, stablecoins are getting more and more attention from the crypto community. These assets have occupied a significant position among the well-known asset classes.
Normally, the value of a stablecoin is pegged to some traditional national currency like the United States dollar. They can also be pegged to some other financial instruments, such as gold.
As implied by the name, stablecoins are considered digital tokens, which are very less volatile as compared to the rest of the crypto types. That is one of the reasons the members of the crypto community get attracted to them.
After the crash of TerraUSD (the algorithmic stablecoin launched by Terra) in 2022, the entities involved in issuing stablecoins have gone through more scrutiny from financial regulatory agencies.
The regulators have been keeping an eye on the quality of the stablecoins’ reserves since then. A research paper was recently published by the International Monetary Fund that pointed toward the significance of a liquid and excellent stablecoin reserve.
As per the report, stablecoins can turn into a stable value source if they have quality reserves. The respective assets have the likelihood of becoming reputable as well as broadly-adopted exchange means.
In addition to this, financial regulatory authorities operating within the US have referred to the hazards associated with the stablecoins, which are not regulated.
Martin Gruenberg (the Federal Deposit Insurance Corporation’s acting chairman) recommended that stringent regulatory measures should be taken to deal with the entities engaged in issuing the stablecoins.
The International Monetary Fund also supported the viewpoint of Gruenberg, saying that the companies issuing stablecoins should go through stringent prudential requirements.
In the meantime, Tether USDT (the biggest stablecoin operating within the crypto industry) has experienced mounted strains from the regulators and community alike. It is considered that the top stablecoin issuer has opaque reserves.
Back in 2021, the platform carried out a settlement with the office of the New York Attorney General for misrepresenting the support thereof. The company additionally saw a minor bank run because of the huge crash of the Terra ecosystem.
At that time, it had to process withdrawals of approximately $10 billion worth. Notwithstanding the expanding scrutiny of the asset class, the rate of its adoption has increased across the globe.
It was formerly reported that nearly $18.2 trillion worth was processed by Tether in transfers in 2022, before Mastercard, Visa, and other such conventional payment processors.
Reports published by many media outlets have additionally disclosed that residents in stressed economies rely on stablecoin for their transfers and savings.
Tether Expresses Plans to Suspend Lending from Reserves during This Year
Recently, the stablecoin issuer revealed its strategy to halt giving loans from the reserves as some rumors are circulating about the firm’s secured loans. Tether repeated that the loans provided by the company were overcollateralized. Nevertheless, it has determined to suspend the service during the current year.
The post Moody’s Develops A Scoring System For Stablecoins appeared first on CryptocyNews.com.
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