Moody’s Mulls Stablecoin Scores as Regulators Circle: Report

Moody’s Corporation is reportedly planning to develop a scoring system for stablecoins, per reporting from Bloomberg. 

The scoring system will include up to 20 stablecoins, analyzing the quality of each reserve’s attestation. 

The system will not reportedly be an official credit rating.

Stablecoins—which are cryptocurrencies intended to trade at an equal value to a non-digital asset, such as the U.S. dollar or gold—are the market’s most-traded crypto asset, with a combined trading volume of $7.9 trillion in 2022.

Moody’s did not immediately respond to Decrypt’s request for comment. 

Stablecoins and regulations

Moody’s scoring system comes at a time when regulators are taking a closer look at the stablecoin market, especially in the wake of Terra’s high-profile collapse last May.  

The chairman of the Federal Deposit Insurance Corporation (FDIC) Martin Gruenberg said last October that “all payment stablecoin issuers should – just like banks, whether Federal or state-chartered, be subject to prudential regulation and oversight.”

Market leaders Tether and Circle have also ballooned over the past several years, cumulatively hitting a market capitalization of more than $100 billion. 

Both stablecoin offerings, USDT and USDC, are backed by reserves in a variety of traditional financial assets.

“It’s a positive sign that an independent ratings firm sees the importance of scrutinizing whether payment stablecoins actually live up to their name in terms of being stable, well managed and transparent,” a Circle spokesperson told Decrypt via email. 

USDT, the market’s largest stablecoin with a capitalization of $67 billion, has, however, had a checkered past with transparency and investor confidence. 

The CFTC even fined the USDT issuer $41 million in 2021 for lying about its dollar reserves, though Tether has recently taken actions to allay regulatory and investor concerns.