Moody’s Corporation, One Of The World’s Leading Rating Agencies, Begins Considering How To Check The Risk And Health Of Stablecoins, Bloomberg News report January 26th.
The need to value stablecoins arises amid renewed pressure from governments and regulators around the world.
The agency scoring system analyzes up to 20 stablecoins. This is based on the quality of the reserve’s proof, the news outlet reported, citing a person familiar with the ratings agency’s plans.
Moody’s specializes in providing credit ratings to companies in various industries. The firm, which provides credit ratings for publicly traded cryptocurrency companies, declined Bloomberg’s request for comment.
Citing another source familiar with the matter, Bloomberg reported that Moody’s stablecoin scoring project is still in its early stages, adding that the scores are not equivalent to official credit ratings.
Algorithmic stablecoins and collateral stablecoins are both types of stablecoins, cryptocurrencies designed to maintain a stable value, usually pegged to a fiat currency like the US dollar. increase.
Algorithmic stablecoins use a complex set of algorithms and smart contracts to maintain their value. These algorithms are designed to automatically adjust the supply of stablecoins in response to changes in demand in order to keep the value of stablecoins stable. This is done by adjusting the interest rate paid to stablecoin holders or using other mechanisms such as over-collateralization.
Collateral stablecoins, on the other hand, are backed by a reserve of assets such as fiat currency and gold held as collateral to underpin the value of the stablecoin. These assets are held in trusts and the value of the stablecoin is directly tied to the value of the assets held in the trust.
Cryptoslate reached out to Moody’s but received no response.
