S&P Global launches stablecoin ratings, ranks GUSD, USDP, USDC highest
S&P Global has recently introduced a comprehensive assessment for stablecoins, evaluating their stability and performance. In its inaugural ratings of eight prominent stablecoins, none achieved the highest rating. However, Gemini (GUSD), Pax (USDP), and USD Coin (USDC) were ranked the highest with a rating of 2 (strong), reflecting their robust asset backing. These stablecoins have demonstrated excellence in asset quality, governance, legal and regulatory compliance, redeemability and liquidity, technology, third-party dependencies, and track record.
The assessment process undertaken by S&P Global involves a thorough examination of asset quality risks, consideration of risk mitigation factors, and an evaluation of various essential aspects such as governance, legal and regulatory framework, redeemability and liquidity, technology, third-party dependencies, and track record.
S&P Global, renowned for its S&P 500 Index, recognizes the growing significance of stablecoins in financial markets, serving as a crucial link between digital and real-world assets. Despite their increasing prominence, S&P Global emphasizes that stablecoins are not immune to factors like asset quality, governance, and liquidity.
Notably, Tether (USDT), the leading stablecoin by market capitalization, received a rating of 4 (constrained) primarily due to a lack of transparency regarding its assets. TrueUSD and FRAX both received a rating of 5 (weak), with TrueUSD’s rating attributed to insufficient information and FRAX’s rating linked to its continued reliance on an algorithm, despite a community decision to transition to USD backing in March.
This move by S&P Global represents a significant deepening of its involvement in stablecoin evaluation, underscoring the increasing importance of these digital assets in the broader financial landscape. Moody’s, another prominent rating service, also entered the stablecoin analysis arena in November with its Digital Asset Monitor service, utilizing artificial intelligence for assessment.
