Credit rating agency Moody’s Investors Service warned that “financial institutions may reconsider adopting stablecoins to settle deals involving tokenized securities. due to concerns about the potential volatility of the coin.”
In a recent “Sector Comment” report published on March 16, Moody’s said fiat-backed stablecoins could face new problems after USDC slipped the peg on March 10.
“So far, fiat-backed large stablecoins have shown remarkable flexibility. without being damaged by past scandals such as the collapse of FTX,” said analysts Cristiano Ventricelli, Vincent Gusdorf, Rajeev Bamra and Fabian Astic. Recent events have shown that the relatively limited dependence of stablecoin issuers on financial institutions. limits their stability.”
The sudden collapse of Silicon Valley banks on March 10 was a major risk for USDC issuer Circle Internet Financial, which has $3.3 billion of assets held in the bank. By the time of three days Circle haveApproximately $3 Billion USDC Redemption As the stablecoin’s value dropped to as low as around $0.87.
USDC backed the peg quickly after the Federal Deposit Insurance Corporation announced it would back all deposits at Silicon Valley banks. Circle CEO Jeremy Allaire told Bloomberg on March 14 that his company had access to 3.3 billion in reserves. million dollars already
Moody’s said USDC could peg back once U.S. regulators decide to repay Silicon Valley Bank’s unsecured deposits. “Otherwise, USDC could suffer and be forced to liquidate the asset,” Moody’s analysts added.
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