This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
Welcome to Reed Smith's viewpoints — timely commentary from our lawyers on topics relevant to your business and wider industry. Browse to see the latest news and subscribe to receive updates on topics that matter to you, directly to your mailbox.
| 1 minute read

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.

“Ultimately I don't think crypto native clients of stablecoins will care much for the ratings — end of the day, traders like tether because it's convenient, lindy and is perceived to be remote from U.S. regulators. But the ratings are positive in terms of institutional entities getting comfortable with the sector.” - Nic Carter, Co-founder Castle Island Ventures


stablecoin, on-chain, fintech, emerging technologies