The ratings for stablecoins, which are among the most used altcoins, drew attention. Tether (USDT), the world’s most popular stablecoin, has not done well on a recent credit rating list. The ratings are not official but can give an idea of how institutions view stablecoin stability and support. Bluechip, an independent not-for-profit stablecoin rating agency, announced on July 22 that it will release new ratings listings in August.
Altcoin ratings questioned
“This is a step forward,” commented economist John Paul Koning. He also noted that -GUSD, BUSD and Paxos “rightly” received the best ratings. He added that “offshore stablecoins” like Tether and TrueUSD “get the worst ratings.” Patrick McHenry, Chairman of the US House of Representatives Financial Services Committee, also tweeted the stablecoin ratings list. Tether received an overall ‘D’ rating, according to Bluechip. The ‘high risk’ stigma was applied due to lack of decentralization. There were issues with governance that included reserve verification and redemption transparency. It also stamped Tether’s gold standard stablecoin, XAUT, with a ‘D’.
Bluechip stated that Tether could be upgraded to ‘C’ by “announcement of the names of its banks and custodians”. It may also perform a full financial audit by an independent auditor or “add transparent and reasonable timelines for amortization to the Terms of Service”. “Most of our Bluechip stablecoin ratings are based on governance quality,” said Garett Jones, Bluechip chief economist. “Wealth invites fortune hunters, whether inside or outside the institution,” he added. However, Tether’s CTO Paolo Ardoino tweeted a meme about it on July 23, citing his lack of impression with the rating.
— Paolo Ardoino 🤖🍐 (@paoloardoino) July 22, 2023
Which are the best and worst?
Strangely enough, Binance USD (BUSD) received an ‘A’ rating despite suing issuer Paxos as part of the SEC’s war against crypto. Fully regulated Gemini USD (GUSD) also received an ‘A’ rating, as did the frequently de-peg Liquidity USD (LUSD). As Cryptokoin.com reported, the SEC also targeted Gemini with a lawsuit. The rating agency marked Circle’s USD Coin (USDC) as ‘B+’. Bluechip rated it ‘low risk’ due to its governance features, despite being fully centralized, which caused it to lose points.
The world’s third largest stablecoin, DAI, earned points for its decentralization and also received a ‘B+’. The only stablecoin with an ‘F’ topped the bottom was Tron’s USDD. It received a red flag for lack of wealth, stability and governance. TrueUSD (TUSD), which has been on the agenda recently, has also received a ‘D’ grade.
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