Recently, S&P Global has released a report assessing the stability of the top 8 stablecoins in the market.
According to the assessment criteria, S&P Global examined the risks associated with asset quality, risk mitigation factors, governance, legal and regulatory frameworks, redemption and liquidity, technology, and third-party dependencies for each stablecoin.
Lapo Guadagnuolo, a senior analyst at S&P Global Ratings, emphasized the increasing popularity of stablecoins in the financial market, serving as a vital bridge between digital assets and the real world. However, he also pointed out that stablecoins are not immune to factors such as asset quality, management, and liquidity.
In terms of rankings, Gemini (GUSD), Pax (USDP), and USD Coin (USDC) all ranked second, labeled as strong stablecoins due to the quality of their asset backing. Both Gemini and Pax are supervised by the New York State Department of Financial Services.
On the other hand, Tether (USDT), the largest stablecoin by market capitalization, was ranked fourth, indicating that it has limitations, primarily due to transparency issues regarding its asset backing.
TrueUSD (TUSD) received a ranking of 5, classified as a weak stablecoin, also based on the lack of information. It shares this ranking with FRAX, which continues to rely on an algorithm, despite the community’s decision in March to transition to USD support.
Notably, there is no stablecoin that received the highest rating, and two types received the lowest scores due to their inability to maintain a fiat peg.
S&P rates stablecoins on a scale of 1-5: 1 “Very Strong”: None 2 “Strong”: USDC/USDP/GUSD 3 “Adequate”: None 4 “Constrained”: USDT/FDUSD/DAI 5 “Weak”: FRAX/TUSD
It’s worth mentioning that Moody’s credit rating service also began analyzing stablecoins in November with its Digital Asset Monitor service, which utilizes artificial intelligence.