Stablecoin Stability: S&P Global Ratings Finds Half Have Adequate or Above Ability
S&P Global Ratings has released its latest assessment of stablecoin stability, showing that more than half of the stablecoins it evaluated have an adequate or above ability to maintain their peg to fiat currency.
The ratings agency assessed 11 stablecoins and found that six of them had a strong rating, with two others falling into the 'adequate' category. Meanwhile, three stablecoins were rated as 'weak.'
According to Mohamed Damak, Digital Assets Analyst at S&P Global Ratings, 'Stablecoins can face risks that lead to de-pegging.' However, he noted that 'significant differences remain across stablecoins which can increase the risk of de-pegging.'
The assessment takes into account several factors, including peg stability, liquidity, and governance. S&P Global Ratings uses a 1-5 scale to rate each stablecoin's ability to maintain its peg, with 1 being 'very strong' and 5 being 'weak.' The ratings agency also considers the asset strength of the underlying assets, as well as the issuer's track record.
Some notable stablecoins included in the assessment are Euro Coin (EURC), USD Coin (USDC), Global Dollar (USDG), and Tether (USDT). EURC and USDC received a strong rating, while USDG was rated as adequate. In contrast, Tether was rated as weak.