In a combination of both traditional and decentralized finance (defi) sectors, S&P Global Ratings has announced the launch of its stablecoin stability assessment. The latest tool aims to evaluate the ability of stablecoins to maintain their value relative to fiat currencies.
New S&P Ratings System Grades Stablecoins
S&P Global Ratings’ new assessment system grades stablecoins on a scale ranging from 1 (very strong) to 5 (weak), providing a nuanced understanding of their stability. The assessment includes a thorough examination of asset quality risks such as credit, market value, and custody, alongside the evaluation of overcollateralization requirements and liquidation mechanisms.
The initial launch covers eight leading stablecoins: DAI, FDUSD, FRAX, GUSD, USDP, tether (USDT), TUSD, and USDC. The assessments offer a comprehensive view of each stablecoin’s capacity to maintain its peg to a fiat currency and are informed by S&P’s analytical methods. Lapo Guadagnuolo, a senior analyst at S&P Global Ratings, emphasized the growing importance of stablecoins in the financial markets.
Guadagnuolo notes that while stablecoins are becoming increasingly integrated into financial systems as bridges between digital and real-world assets, they are not without risks. Factors such as asset quality, governance, and liquidity are critical to their stability, underscoring the importance of S&P’s comprehensive assessments in navigating these challenges.
Chuck Mounts, chief defi officer at S&P Global Ratings, expressed enthusiasm for the new service, highlighting its alignment with digital asset market trends. Mounts said, “The launch of this new service underscores our commitment to staying at the forefront of digital asset market trends and providing our clients with the insights they need to make informed decisions.” S&P’s new fiat-pegged token rankings follows the stablecoin assessment tool offered by Moody’s Analytics.
In the rankings, usd coin (USDC) and pax dollar (USDP) emerged as the leading stablecoins, both achieving a score of 2. Trueusd (TUSD) and frax dollar (FRAX) were both rated a 5, categorized as “weak.” DAI, FDUSD, and tether (USDT) were assigned a 4, denoted as “constrained” in S&P’s evaluation of stablecoins. Additionally, Gemini dollar (GUSD) was recognized with a score of 2, indicating a “strong” position in the assessment of eight distinct stablecoins.
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