Morningstar creates a rating service for debt instruments on the blockchain

Morningstar Credit Ratings is developing a service based on blockchain technology for evaluating debt securities to be issued in the form of tokens.

To date, the debt securities industry is valued at $ 117 trillion and is managed by various trust intermediaries. Morningstar COO Michael Brawer noted that with the new service, this area will turn into a decentralized financial network. In addition, this approach will help increase the legitimacy of digital assets and attract investment in them.

“We work closely with a number of blockchain-oriented firms that want to issue bonds based on a distributed registry. At the moment, we are looking for opportunities to provide credit opinions, whether it is a credit rating, some kind of credit data or analytics. We want to provide services on the blockchain, ”Braver said.

Morningstar will work with both government and corporate bonds. At the same time, the possibilities of the service will be limited by structural debt instruments. The system will be based on the Ethereum blockchain, but in the future its capabilities will be distributed among other networks using oracles.

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The rating service will give crypto assets a rating on a scale of 1 to 5, which will be visible to all users. In addition, additional tools for making more informed investment decisions will be presented to customers of a paid subscription. According to preliminary data, the launch of public services will take place this year.

The service will also allow borrowers and lenders to find each other and save money due to the lack of the need to use depositories and trusted intermediaries. According to preliminary estimates, this will save up to 500 base points on commissions in the transaction process.

Partners of Morningstar to launch the service may be fintech startup Figure, alternative investment company Cadence and the Polymath platform. The company admits the likelihood that the US Securities and Exchange Commission (SEC) may contact it to verify the reliability of the instruments offered.