products Ratings /ratings/en/products-benefits/products/stablecoin-stability-assessment content esgSubNav

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.



Watch Webinar Replay

Understanding S&P Global Ratings Stablecoin Stability Assessment

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.


Learn More About Our Analytical Approach

Interested in learning more?

Get In Touch

Why S&P Global Ratings?

View Our Brochure

DOWNLOAD


Related Content


Contact

 

Chuck Mounts

Chief DeFi Officer

Charles Jansen

Head of DeFi

Jake Vukelic

Director, DeFi Strategy & Planning

Contact us to learn more.

Contact Us