You are currently viewing USDC depeg will hinder stablecoins’ growth, increase regulatory scrutiny — Moody’s

News USDC) losing its peg, could negatively affect stablecoin adoption and potentially increase calls for regulation, argued credit rating agency Moody’s Investors Service. 

In its latest “Sector Comment” report published on March 16, Moody’s says fiat-backed stablecoins could face new resistance following USDC’s depegging on March 10.

“Until now, large fiat-backed stablecoins had shown remarkable resilience, having emerged unscathed from past scandals such as the collapse of FTX,” wrote analysts Cristiano Ventricelli, Vincent Gusdorf, Rajeev Bamra and Fabian Astic. “However, recent events have shown that the reliance of stablecoin issuers on a relatively small set of off-chain financial institutions limits their stability.”

Customers lining up outside of Silicon Valley Bank at its Menlo Park, CA branch.

— Cointelegraph (@Cointelegraph) March 10, 2023

The sudden collapse of Silicon Valley Bank on March 10 was a significant risk event for USDC issuer Circle Internet Financial, which had $3.3 billion in assets tied up in

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