Credit rating company Moody's is reportedly planning to implement a scoring system* for stablecoins, involving only 20 digital assets.
*Classification system according to quality or merit or quantity
The scoring system is so far still in an early phase of development, where it will assess the quality of stablecoin reserves** although it is not an official credit rating of the company.
**Allows anyone to create a decentralized stablecoin independent of the fiat financial system with the goal of addressing the effects of hyperinflation
In context, a stablecoin is a type of cryptocurrency whose value is pegged to a fiat currency such as the United States (US) dollar or other financial instruments.
Although it is still uncertain whether it will be risk-free or otherwise, the actions taken by Moody are aimed at providing an alternative to crypto price movements by tying the value of stablecoins to other assets.
Additionally, the largest stablecoin Tether (USDT) that allegedly misrepresented the amount of fiat collateral settled the issue with the New York Attorney General's office in 2021 by paying $18.5 million in damages.
While recently, USDT intends to stop lending funds throughout the year 2023 from their reserves due to over-collateralized loans.
Over the past few months, stablecoin reserves have been studied in more detail following the crypto market that is continuously bleeding in 2022 and not forgetting the destruction of the Terra ecosystem.
