Moody's works on system to classify stablecoins as scrutiny deepens - report

With stablecoins coming under increased investor and regulatory scrutiny amid further growth in the asset class, credit rater Moody's ( NYSE: MCO ) was said to be in the early stages of developing a scoring system for the tokens, Bloomberg reported Thursday, citing a person with knowledge on the matter. Up to 20 stablecoins will be analyzed within the system, which will not represent an official credit rating, based on the quality of evidence on the reserves backing them. A stablecoin is a digital token whose value is pegged to a reference asset, typically fiat currencies (think U.S. dollar) or commodities (think gold). Stablecoin issuers typically achieve the peg by maintaining reserve assets as collateral. The move comes as stablecoin reserve attestations have faced more scrutiny in recent years, coinciding with the increased usage of the tokens. In 2021, dollar-pegged stablecoin tether ( USDT-USD ) was fined by U.S. authorities for being dishonest about its reserves, Bloomberg noted. Tether ( USDT-USD ), the largest stablecoin by market cap, said on Dec. 14, 2022 it will reduce the "overcollateralized" secured loans in its reserves to zero throughout 2023. In mid-December 2022, 63 people were arrested by Chinese police for allegedly laundering $1.7B using tether ( USDT-USD ).