S&P Global launches stablecoin ratings, ranks GUSD, USDP, USDC highest

1 “Very Strong” none 2 “Strong” USDC/USDP/GUSD 3 “Adequate” none 4 “Constrained” USDT/FDUSD/DAI 5 “Weak”FRAX/TUSD

S&P Global has launched a stablecoin stability assessment. In its initial ratings of the eight stablecoins, none were given the top mark, but two received the lowest, based on their ability to maintain their fiat pegs.

According to a statement, to establish its ratings, S&P Global first examines asset quality risks, then factors mitigating the risks, and then considers governance, legal and regulatory framework, redeemability and liquidity, technology and third-party dependencies, and track record.

S&P Global Ratings senior analyst Lapo Guadagnuolo said:

“We see stablecoins becoming further embedded into the fabric of financial markets, acting as an important bridge between digital and real-world assets. Nonetheless, it's important to acknowledge that stablecoins are not immune to factors such as asset quality, governance, and liquidity.”

Tether, by far the leading stablecoin by market cap, was rated 4 (constrained). The assessment was largely based on the lack of transparency of its assets. TrueUSD’s 5 (weak) rating was also based on a lack of information. FRAX was rated 5 as well, due to its continuing dependence on an algorithm, despite a community decision in March to transition to USD backing.