Ratings giant Moody’s develops rating system for stablecoins = report

Developing a stablecoin evaluation system?

Moody’s, a major global rating agency, has established a rating system for stablecoins. Bloomberg reported on the 26th, citing multiple sources.

It is believed that regulatory bodies are tightening their scrutiny of stablecoins, which are often used in crypto asset (virtual currency) transactions. Moody’s plans to rate up to 20 stablecoins based on the level of verification of the underlying assets, the sources said.

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The construction of the evaluation system is still in its early stages. The company is not expected to provide an official rating at this time, sources said.

What is a stablecoin

A cryptocurrency whose price is always stable. Various stablecoins have been developed whose value is backed by legal currency or virtual currency, or whose price is stabilized by algorithms.

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Stablecoins require issuers to set aside reserves so that they are always available for redemption from their owners. With algorithmic stablecoins unable to maintain their value due to the Terra turmoil, global regulators are stepping up their scrutiny of stablecoins and stepping up investor protection.

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The stablecoin with the strongest concerns about reserves is USDT, whose value is linked 1:1 with the US dollar. Tether, which issues USDT, regularly publishes the backing assets and publishes the results of audits of the backing assets in an effort to improve trust.

Tether has also opened a page on its official website that publishes reserve information for greater transparency. The audit report is also published on this page, and it is currently available until the end of September 2022.

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Japanese regulation

Regarding stablecoins, Japan is also developing regulations.

Last month, the Financial Services Agency (FSA) released presentation materials for a lecture on cryptocurrencies given by International Deputy Director General Amaya. This document raises the possibility that the Financial Services Agency will tighten regulations on algorithmic stablecoins. The revised law, which is currently open for public comment, includes the following prohibited acts:

Indications such as so-called algorithmic stablecoins and crypto-asset-backed stablecoins that mislead people into thinking that they are stablecoins even though their value stability is not always ensured.

Relation: Financial Services Agency tightens regulations on algorithmic stablecoins

After that, it was reported that the Financial Services Agency plans to lift the ban on domestic distribution of stablecoins issued overseas. It has not been clarified which brands will be subject to the lifting of the ban, but it is said that they plan to apply it in line with the latest Fund Settlement Law scheduled to be enforced in 2023.

The new revised Payment Services Act was enacted on June 3, 2018, but at that time, detailed guidelines had not yet been stipulated.

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