S&P Global Ratings Evaluates Leading Stablecoins

Rating agency S&P Global Ratings released its ninth “stability assessment” of stablecoins USDC, USDT, DAI, FDUSD, FRAX, USDM, GUSD, USDP, and TUSD.

In their analysis, the agency’s experts focused on the “quality of the assets backing the coin,” which was measured by depositary risks, as well as credit and market value.

They also considered the degree of regulation, the issuer’s business model, transparency, liquidity, redemption capability, and the technologies used.

S&P Global Ratings identified five assessment levels:

1. Very strong.
2. Strong.
3. Adequate.
4. Limited.
5. Weak.

In the current rating, none of the listed assets received the highest score.

USDC, USDP, and GUSD were rated as “strong,” while only USDM from Mountain Protocol was deemed “adequate.”

Stablecoins USDT, DAI, and FDUSD were described as “limited.” The most high-risk and lowest-rated were FRAX and TUSD.

Mohamed Damak, Senior Director at S&P Global Ratings, stated that four of the nine assessed stablecoins showed a decline in their ratings.

“This situation has arisen because there is no transparency or understanding of the risks inherent in various ‘stablecoins.’ Although the market is concentrated, as the DeFi ecosystem grows, we anticipate an increase in the number of stablecoins and their use cases,” he added.

On March 5, the Binance-backed stablecoin FDUSD lost its peg to the US dollar, dropping momentarily to $0.92.

In January, TUSD lost parity with its base asset, with its price falling to $0.97.