Stablecoin Stability Assessment
Stablecoin Risk, Quantified
What are Stablecoins?
Stablecoins are cryptocurrencies designed to maintain a stable value, often pegged to a 1:1 relationship with a fiat currency. As a result, absent a depegging, stablecoins do not demonstrate the volatility that is associated with other cryptocurrencies.
Because of their stability, stablecoins form a bridge between traditional finance and decentralized finance capabilities by making it easier for businesses and individuals to conduct transactions and make investments.
S&P Global Ratings Stablecoin Stability Assessment is designed to provide market stakeholders with transparency into the stability of various stablecoins and specific insight into their depegging risks.
Our Approach
Our analytic approach begins with the assessment of asset quality risks, including credit, market value, and custody risks. We further analyze to what degree overcollateralization requirements and liquidation mechanisms may mitigate these risks (light gray box). Through a combination of these factors, we determine an asset assessment score that ranges from 1 (very strong) to 5 (weak) (black box).
Following the Asset Assessment, our analytic approach considers five additional areas (dark gray boxes):
• Governance
• Legal and regulatory framework
• Redeemability and liquidity
• Technology and third-party dependencies, and
• Track record
The strengths and weaknesses for each of these five areas add to the holistic risk assessment view, which may lead to a negative adjustment to the Asset Assessment score. As a result, the stablecoin stability assessment (red box) can be in line with or lower than the asset assessment.
Why S&P Global Ratings?
Highly Informed
The Stablecoin Stability Assessment culminated from essential insights gathered in numerous deep-dive interviews with key market participants in the traditional finance and decentralized finance sectors.
Expertise
Our Digital Asset Lab is made up of credit and Cryptofinance analysts and researchers so we have a unique analytical understanding of the intersection of traditional finance and digital assets.
Track Record in Assessing Risk
With over 150 years of experience in providing independent opinions to the markets and more than 1 million credit ratings outstanding, we deliver essential intelligence to help market participants make informed decisions with conviction.
Investor Preference
Of the top 20 global institutional investors, 95% reference S&P Global Ratings.* We are an essential source of information for global financial markets.
*According to 3rd party investor survey conducted in 2023.
Stablecoin Stability Assessment Reports
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