Moody’s Shakes Crypto World: Proposes First-Ever Credit Rating Framework for Stablecoins
Wall Street's grading giant just entered the stablecoin arena—and the entire digital asset market is watching.
Moody's, the 116-year-old credit rating titan, dropped a bombshell proposal this week: a formal framework to assess the risk of stablecoins. This isn't just another analyst report. It's a potential blueprint for institutional adoption, a signal that the old guard of finance is finally building bridges to the new.
Why This Changes Everything
For years, stablecoins operated in a regulatory gray area. Investors relied on vague promises of 'full backing' and sporadic attestations. Moody's framework cuts through the fog. It proposes evaluating the quality of reserve assets, governance structures, and redemption processes—assigning clear, comparable grades.
Think of it as a nutritional label for your digital dollar. No more guessing what's inside the black box.
The Institutional Green Light?
Pension funds, asset managers, and corporate treasuries have been circling crypto for years. Their biggest hurdle? Trust and standardized risk assessment. Moody's move could provide the missing piece. A 'AAA' rated stablecoin suddenly becomes a viable settlement layer for trillion-dollar balance sheets.
It bypasses years of regulatory limbo by applying a familiar, time-tested methodology from traditional finance. Cynics might say it's just another way for the old system to slap a fee on innovation—but sometimes, legitimacy has a price tag.
The Ripple Effect
Expect a brutal shakeout. Top-tier stablecoins with pristine, transparent reserves will rush to get rated. The rest? They'll face unprecedented scrutiny. This framework doesn't just measure risk—it could actively redistribute market share overnight.
The proposal lands as global regulators finalize their own stablecoin rules. Moody's might have just handed them the grading rubric.
One thing's clear: the era of 'trust me, bro' collateral is over. The big guns are here to score it. Whether that's a blessing or a curse depends on which side of the transparency ledger you're sitting on.
Moody’s proposes a new way to rate stablecoins specifically
Moody’s new framework suggests that two tokens linked to the US dollar, which claim to be backed 1:1, could be subjected to different ratings depending on the type of assets used to back them.
Sources noted that the credit rating agency has released this suggestion at a time when several financial institutions are preparing themselves to begin embracing or boost their use of stablecoins, especially in the United States.
Following this situation, Moody’s elaborated that “The second part of our proposed analysis WOULD focus on market value risks by evaluating the risk associated with each reserve asset based on its type and how long until it matures.”
To expand on this statement, sources familiar with the matter highlighted that this analysis will result in the existence of advance rates that apply to each kind of asset’s value. Moreover, they acknowledged that the agency’s proposal recommends considering a stablecoin’s operational risk, liquidity risk, technology risk, and other factors when determining its rating.
As this proposal was shared with the public for feedback, reports mentioned that Tether, a financial technology company that issues the world’s largest stablecoin has received backlash in the past concerning its transparency regarding the reserves supporting its stablecoin.
To address this criticism, the fintech company took crucial steps aimed at reassuring the market. The crypto firm also made it clear that it intends to launch a stablecoin targeted at the US market soon.
Meanwhile, reports dated October noted that Tether announced it has a total of approximately $135 billion invested in US Treasuries. Regarding the Guiding and Establishing National Innovation for US Stablecoins (GENIUS Act) that was recently approved, reliable sources stated that the bill establishes the first comprehensive federal regulatory framework for payment stablecoins in the United States. These sources mentioned that the bill encourages issuers to maintain highly liquid reserves to back their stablecoins.
On the other hand, analysts argued that such reserves should cover SAFE assets, such as deposits at insured banks and US Treasury bills.
Moody’s proposal raises heated debates among individuals
Following Moody’s proposal, reports this week highlighted that the credit rating agency presented a strategic plan outlining how it would evaluate stablecoins.
In this detailed plan, Moody’s stated that its “cross-sector rating methodology” would be the suitable method to apply globally to stablecoins, particularly where practices of issuing and managing this cryptocurrency are kept separate from other activities.
The agency referred to these separated assets as reserve assets. According to them, effective segregation means these reserve assets can only be utilised in meeting obligations linked to the stablecoin. This applies even if the issuer or its affiliates go bankrupt.
Notably, Moody’s reportedly created room for comments from market participants on its suggested system. The deadline for feedback is scheduled for January 26, 2026.
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