Moody's Takes On Stablecoins: New Ratings Spotlight Redemption Risks, Not Returns

2025-12-18 02:47:43

Source: CryptoNewsNet Original Title: Moody’s takes on stablecoins: New ratings spotlight redemption risks, not returns Original Link:

Overview

Moody’s Ratings, the venerable 116-year-old credit rating firm, has unveiled a proposal to assess stablecoins like any other deposit: by looking at the quality of reserve assets, market value risk, and operational safeguards. Public comments are open until Jan. 29.

Key Points

Moody’s is proposing a new system to rate stablecoins based on reserve quality, market value risk, and operational safeguards.
The firm aims to provide investors with a clearer picture of redemption reliability.
Ratings would be determined by the “weakest link” in a stablecoin’s reserve pool, factoring in liquidity, governance, regulatory context, and technology risks, while algorithmic stablecoins are excluded.

Why It Matters

Stablecoins have been quietly sneaking into banks, corporate treasuries, and payment systems, all while being pegged to the dollar. The regulatory landscape is evolving, and Moody’s hopes its ratings can shed light on this “still evolving and often opaque” market, without inadvertently predicting the next market downturn.

Rating Methodology

Moody’s would evaluate the credit quality of every asset in a stablecoin’s reserve pool, factor in market value, and then take the lowest score (the “weakest link,” or the lowest-rated asset among the token’s reserves).

Liquidity, governance, regulatory context, and tech risks like blockchain forks all factor in. Short-term government securities and cash deposits earn brownie points, while algorithmic stablecoins are excluded.

Business Model

Notably, stablecoin issuers would have to pay for the assessment. The ratings won’t tell you whether a coin will make you rich—or melt your savings—they’re purely about redemption reliability: can you get your dollars back when you want them?

Moody’s Track Record

In the past, Moody’s has examined the efficiency gains from investing in assets such as government bonds through tokenized funds. It also assigned an AA rating to the SGD Delta Fund, the first fund to use a major platform’s tokenization infrastructure.

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