S&P Global Ratings Releases Stablecoin Stability Assessment

According to Blockworks, S&P Global Ratings revealed its stablecoin stability assessment on Tuesday, evaluating Dai (DAI), First Digital USD (FDUSD), Tether (USDT), Frax (FRAX), TrueUSD (TUSD), and USD Coin (USDC). Analysts primarily assessed the stablecoins based on the quality of the assets backing them, considering custody risks, credit, and market value. Other factors, such as regulation, governance, supervision, liquidity, redeemability, and technology, were also measured and contributed to lower assessments for some stablecoins. USDC, USDP, and GUSD received strong assessments, while USDT, DAI, and FDUSD were considered middle of the road or constrained, with evaluations placing them towards the weaker end. FRAX and TUSD were deemed weak. None of the stablecoins in the first assessment received a very strong evaluation, which is the highest grade. S&P Global Ratings senior director Mohamed Damak emphasized that the assessments are not ratings of the stablecoins. He told Blockworks that four out of the eight stablecoins assessed were subject to a negative adjustment. Damak also noted that the market lacks transparency and insight into the inherent risks of different stablecoins, but as the DeFi ecosystem grows, they foresee a rising universe of coins and use cases. S&P may expand its assessment in the future, and is also monitoring the digital assets sector for operational and legal risk, blockchain oracle risk, crypto regulation, and digital bonds.