Tether receives ‘constrained’ assessment from S&P Global

S&P Global Ratings released its stablecoin stability assessment on Tuesday.

The launch considered Dai (DAI), First Digital USD (FDUSD), Tether (USDT), Frax (FRAX), TrueUSD (TUSD), and USD Coin (USDC).

To evaluate stablecoins, analysts mainly focused on the quality of the assets backing them. Overall quality is measured by storage risk, creditworthiness, and market value.

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Regulation, governance, supervision, liquidity, redeemability, and technology are also measured and “contribute to stablecoins being undervalued,” S&P said in a press release.

USDC, USDP, and GUSD are at the top of the list, all highly rated. USDT, DAI, and FDUSD are in the middle, or “constrained,” with ratings toward the weaker side.

On the other hand, FRAX and TUSD are weak.

None of the stablecoins listed in the first assessment received the highest grade of “very strong”.

“Of the eight stablecoins we evaluated, four were subject to negative adjustments,” Mohamed Damak, senior director at S&P Global Ratings, told Blockworks.

Damac emphasized that the valuation is just a valuation, not a valuation of a stablecoin.

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“Consistent feedback has been that the market lacks transparency or insight into the inherent risks of various stablecoins. The market is concentrated, but as the DeFi ecosystem grows, coins and usage We expect the world of cases to increase,” Damack said.

Since this approach can be applied to many stablecoins beyond just the eight listed above, S&P may expand its rating in the future.

Beyond stablecoins, S&P is also keeping an eye on the digital asset sector, focusing on “operational and legal risks, blockchain oracle risks, crypto regulation, and digital bonds.”


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