As the cryptocurrency market activities increase day by day, the initiation of stablecoin stability assessments by S&P Global has caught attention. In the initial evaluation of eight stablecoin projects, none received the highest score, while two projects received the lowest score for their ability to maintain fiat peg.
S&P Global, while conducting these evaluations, considers the quality of asset risks first, then factors mitigating the risks, and finally governance, legal and regulatory framework, redeemability and liquidity, technology, dependencies on third parties, and past performance.
S&P Global, formerly known as Standard & Poor’s and recognized for listing major companies on the US stock exchanges through the S&P 500 Index, had previously drawn attention to the stablecoin sector, but not with the depth of the new evaluations. S&P Global Ratings senior analyst Lapo Guadagnuolo stated that stablecoins play a significant bridge role between crypto and real-world assets, but they are not immune to factors such as asset quality, governance, and liquidity.
According to notable details from the report, thanks to the quality of asset backing, Gemini (GUSD), Pax (USDP), and USD Coin received the highest score of 2, earning a strong evaluation. Gemini and Pax stand out for being regulated by the New York State Department of Financial Services.
Tether, the open market value leader among stablecoins, was rated as limited with a score of 4 due to a lack of transparency in project assets. TrueUSD’s weak rating was also based on a lack of information. FRAX received a weak score of 5 for continuing to rely on an algorithm despite its decision to switch to USD backing in March. Moody’s rating service began analyzing stablecoins with its artificial intelligence-based Crypto Asset Monitor service in November.