The ongoing efforts in the cryptocurrency market are being addressed day by day. In this context, as a notable move by S&P Global, an assessment of stablecoin stability has been initiated. According to the assessment results, none of the eight stablecoin projects received the highest score in the initial evaluation phase, while two projects received the lowest score in terms of their ability to maintain their fiat linkage.
According to S&P Global’s report, the company first examines asset quality risks to create a rating in this field, then considers factors that will mitigate risks, including governance, legal and regulatory frameworks, redemption and liquidity, technology, third-party dependencies, and past performance.
S&P Global, once known as Standard & Poor’s, is recognized for the S&P 500 Index of major companies listed on the US stock exchanges. The company had previously drawn attention to the stablecoin sector, but not as in-depth as the new rating. S&P Global Ratings Senior Analyst Lapo Guadagnuolo made the following statement on the matter: “We see that stablecoins play a significant bridging role between crypto and real-world assets and are becoming more integrated into the structure of financial markets. However, it is important to acknowledge that stablecoins are not without their complexities in terms of asset quality, governance, and liquidity.”
Among the notable details from the report, Gemini (GUSD), Pax (USDP), and USD Coin received a strong 2-point rating due to the quality of their asset support. Gemini and Pax stand out for being regulated by the New York State Department of Financial Services.
Tether, the clear market leader in terms of market value for stablecoins, was rated as limited with 4 points due to the lack of asset transparency of the project. TrueUSD’s weak 5-point rating was also based on a lack of information. FRAX was rated as weak with 5 points, despite deciding to move to USD support in March, due to its ongoing dependence on an algorithm. Moody’s rating service transitioned to stablecoin analysis in November with its Crypto Asset Monitoring service based on artificial intelligence.