S&P Releases Stablecoin Assessment

Credit rating agency Standard & Poors (S&P) released a stablecoin stability assessment last week. Stablecoins are a vital part of the cryptocurrency ecosystem because they provide an alternative to wire transfers, are less volatile than other dominant cryptocurrencies and offer global access to U.S. dollar-denominated financial products. The assessment sought to judge a stablecoin's ability to maintain a stable value relative to a fiat currency on a 5 point scale, with 5 being the weakest.  The eight leading stablecoins were measured: DAI, FDUSD, FRAX, GUSD, USDP, USDT, TUSD, and USDC.  The results were:

No stablecoin received the highest possible ranking. 

Reception of the S&P assessment was mixed.   Nic Carter, Co-founder of VC firm Castle Island Ventures, said that “the ratings are a very positive development in the normalization of stablecoins,” but that he has “quibbles with some of the methodology used.”  Austin Campbell, adjunct Professor at Columbia Business School, echoed these sentiments, opining that S&P “seems really out of their depth and not able to iterate on new products.”  

The assessment nonetheless signals that stablecoins are here to stay.