Abstract
Credit rating agencies have long played an important rolein the economy of the United States. In response to thefinancial crisis of 2008, the Dodd-Frank Wall Street Reformand Consumer Protection Act introduced reforms to increasethe transparency and accountability of credit rating agencies.With the rise of cryptocurrencies and the expansion ofblockchain technology, established credit rating agencies arenow considering offering ratings for cryptocurrencies, in thesame way they rate traditional securities.
 Borrowing from the lessons learned from the experience ofthe 2008 financial crisis, this Note proposes that the UnitedStates government create a public agency to providecryptocurrency ratings. The Note begins by providingbackground information on cryptocurrencies, blockchaintechnology, credit rating agencies, and the subprime mortgagecrisis of 2008. Next, it discusses problems in the credit ratingprocess that were not solved by Dodd-Frank—namely, theprevalence of fraud and conflicts of interest between ratingagencies and issuers. The Note then proposes the publiccryptocurrency rating agency solution and additionalsupplementary reforms that may be adopted to address these unsolved problems.
Highlights
The notion of cryptocurrency (“crypto”) becoming mainstream in the United States would likely have once drawn skepticism from most individuals
The relevance of cryptocurrency ratings may increase in the coming years, given that a reputable credit rating agency, Morningstar, recently announced that it will soon enter into the cryptocurrency rating space.[10]
As additional credit rating agencies follow Morningstar’s path, it is important to consider how lessons learned from credit rating agencies can be applied to cryptocurrency rating agencies
Summary
The notion of cryptocurrency (“crypto”) becoming mainstream in the United States would likely have once drawn skepticism from most individuals. The relevance of cryptocurrency ratings may increase in the coming years, given that a reputable credit rating agency, Morningstar, recently announced that it will soon enter into the cryptocurrency rating space.[10] As additional credit rating agencies follow Morningstar’s path, it is important to consider how lessons learned from credit rating agencies can be applied to cryptocurrency rating agencies. Drawing upon such lessons—in particular from the credit rating agency reforms put into place by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”)11—this Note proposes that the U.S government should create a public agency to provide cryptocurrency ratings.
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