Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
Moody’s is working on a scoring system for stablecoins which will rate them based on their reserve’s quality of attestation.
Usually, such attestations are conducted to ascertain a company’s statement claim and are most time, performed by a third party. According to a Bloomberg report, Moody’s score system will confirm the health status of the reserve backing about 20 stablecoins.
For now, the project is barely starting, that is, it is at the infancy stage and won’t represent an official credit rating. Owing to the fact that stablecoins are usually backed 1:1 to a fiat currency, usually the United States dollar, their issuers are expected to hold a reserve with assets that are at least equivalent to the value of the stablecoins.
Stablecoin Raises Concerns Amongst Investors
In recent times, stablecoin reserve attestation became rampant with the increased use of the digital asset class. Also, many crypto enthusiasts have expressed their concerns about Tether (USDT) and the assets backing it. At a certain period, a Wall Street Journal (WSJ) article suggested that Tether may be tending toward technical insolvency. This assumption came after the company released its reserve attestation.
However, Tether refuted WSJ’s claim citing that 59% of its USDT stablecoin is backed by the US Treasury bills.
In addition, the stablecoin issuer mentioned that the marginal difference is a common occurrence in the industry. Even after that, the court still required the company to submit documents including general ledgers, balance sheets, income statements, cash flow statements, and profit, and loss statements to prove the backing of the stablecoin.
Such incidents have placed stablecoin reserve attestation under severe scrutiny. These attestation reports are published either monthly or every quarter and then certified by third-party auditing and accounting firms.
Meanwhile, stablecoin usage is gaining traction globally amongst central banks and other traditional financial institutions. Last month, several entities began making plans to issue their stablecoin. Bermuda-based Jewel Bank issued a fully backed stablecoin dubbed Jewel USD (JUSD) via the Polygon Network.
The Republic of Palau also announced plans to introduce a national stablecoin in collaboration with Ripple to boost its digitization and full integration of blockchain technology.
The post Moody’s to Launch Stablecoin Reserve Attestation Scoring System appeared first on Blockchain, Crypto and Stock News.
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.