Morningstar to begin Credit Ratings for Blockchain-Based Bonds
Morningstar, the credit ratings conglomerate, is launching a rating system for blockchain-based debt securities. This should have a major impact on the traditional financial system and will likely usher a new wave of institutional investors as the new rating system could further validate this emerging asset class.
According to a Forbes interview on Tuesday, Morningstar’s Chief Operating Officer Michael Brawer believes the new credit-rating system could migrate the $117 trillion debt industry to a blockchain-based financial network. The new system will rate these crypto assets between one to five stars.
Additionally, Morningstar will launch a premium service to clients that require a more personalized experience with evaluating such investments. Morningstar has chosen the Ethereum-blockchain to be the platform of choice for rating bonds.
In his interview with Forbes, Brawer said: “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.”
In addition to security and convenience of blockchain assets, 3rd party trustees and custodians are not required to complete these transactions. Removing this friction enables investors to directly connect with lenders and save them as much as 5% in transaction fees.
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