USDC Depeg Will Hinder Stablecoins’ Growth, Increase Regulatory Scrutiny — Moody’s

Moody’s has recently raised concerns over the USDC’s recent shift away from its peg, warning that this could lead to increased regulatory scrutiny and hinder the growth of other stablecoins. The ratings agency noted that there was “increased risk that some stable coins that are unregulated and/or unbacked can fail to meet expected price stability,” noting that this could cause financial institutions to reconsider using these currencies to settle agreements involving tokenized securities.

Moody’s added that “regulation of stablecoins is slowly evolving,” but not fast enough to prevent some issuers from taking advantage of loopholes and manipulating prices. The agency also suggested that governments should step up their efforts to ensure the stability of these coins, otherwise the lack of trust in their price stability could result in a decreased adoption rate.

The USDC’s recent depeg highlights the importance of regulation and oversight when it comes to stablecoins, and it’s likely that other coins will be under greater scrutiny as well. As these currencies become more popular and are used for more financial activities, it’s important that governments and regulatory bodies are able to maintain trust in their price stability.