KIS Proposes Global Frameworks for Stablecoin Risk Assessment
What happened
Korea Investors Service (KIS) is developing new criteria to assess the credit risks of digital financial products, such as stablecoins and tokenized securities. KIS noted that these digital products carry risks that differ from conventional products, even if they possess the same credit rating. These unique risks include platform risk, smart-contract risk, external risk, and risks related to the representation of legal rights.
From koreatimes.co.kr
Why it matters
KIS stated that global rating firms already have frameworks for assessing stablecoins, noting the market has expanded rapidly since 2020 to about $300 billion. Specifically, S&P focuses on redeemability, while Moody's examines both redemption capacity and the ability to maintain a stable value against fiat currencies.
South Korean reforms are fast-tracking the legalization of KRW-backed stablecoins, attracting significant retail investment.
From koreatimes.co.kr
Who's involved
- S&PGlobal rating firm whose focus is on stablecoin redeemability criteria
- S&P Global RatingsGlobal credit rating agency whose work is discussed regarding stablecoin assessment