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Chicago-based rating firm Morningstar plans to bring its services to the ethereum blockchain, as it seeks to begin rating blockchain-based debt securities.
According to Forbes, the rating firm has already worked on building models that provide accurate methods of rating blockchain-based securities. Hence, the new service could make inroads in moving on the $117 trillion global debt securities market using blockchain technologies, which is largely governed by custodians and trustees.
Speaking to the news outlet, Michael Brower, chief operating officer at Morningstar Credits Ratings, said that the new rating service can help establish the credibility of the new asset class. As such, billions of dollars’ worth of investment are expected to enter the crypto space.
“We’re working very closely with a number of blockchain-oriented firms who are looking to issue debt instruments on blockchain,” Brawer said.
Morningstar Credit Ratings will offer publicly available ratings of one to five stars to the crypto assets and introduce a premium customs service that utilizes its internal modeling to help a client evaluate the investments.
Although its services cover government and corporate bonds, its blockchains have been limited to structured finance debits instruments by far. Further, its system for rating bonds will be placed directly on the ethereum blockchain and soon on other blockchains via a technology called an oracle.
“We're looking to see how we can also provide credit opinions, whether it’s a credit rating or different types of credit data and credit analytics that accompany those debt instruments, and we’re also looking to provide our services on a blockchain,” Brawer stated.
The public ratings are slated to be launched later this year and the premium service by the end of 2020.
Meanwhile, cryptocurrency exchange Coinbase recently introduced the Crypto Rating Council in collaboration with Anchorage, Bittrex, Circle, DRW Cumberland, Genesis, Grayscale Investments, and Kraken. The organization aims to help traders comply with U.S. federal securities laws.
