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Credit rating agencies have long played an important role
in the economy of the United States. In response to the
financial crisis of 2008, the Dodd-Frank Wall Street Reform
and Consumer Protection Act introduced reforms to increase
the transparency and accountability of credit rating agencies.
With the rise of cryptocurrencies and the expansion of
blockchain technology, established credit rating agencies are
now considering offering ratings for cryptocurrencies, in the
same way they rate traditional securities.
Borrowing from the lessons learned from the experience of
the 2008 financial crisis, this Note proposes that the United
States government create a public agency to provide
cryptocurrency ratings. The Note begins by providing
background information on cryptocurrencies, blockchain
technology, credit rating agencies, and the subprime mortgage
crisis of 2008. Next, it discusses problems in the credit rating
process that were not solved by Dodd-Frank—namely, the
prevalence of fraud and conflicts of interest between rating
agencies and issuers. The Note then proposes the public
cryptocurrency rating agency solution and additional
supplementary reforms that may be adopted to address these unsolved problems.
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