- Tether (USDT) receives a low ‘D’ rating from Bluechip, implying high risk, while Binance USD (BUSD) and Gemini USD (GUSD) earn stellar ‘A’ grades.
- Bluechip indicates Tether could raise its score by increasing transparency regarding its banks and custodians and conducting a comprehensive financial audit.
An independent nonprofit stablecoin rating agency, Bluechip, recently published its credit ratings list, where the industry giant, Tether (USDT), scored a disappointing ‘D’, indicating high-risk. In contrast, Binance USD (BUSD) and Gemini USD (GUSD) shone bright with ‘A’ ratings, suggesting remarkable governance and robust stability.
The Stablecoin Tug of War
Tether, the most widely-used stablecoin globally, has recently faced criticism for its lack of transparency and decentralization, contributing to its low rating. Other concerning factors included issues with governance such as reserve verification and redemption transparency. Bluechip suggested that revealing the names of its banks and custodians or undergoing a full-scale financial audit could help Tether improve its rating to a ‘C’.
Chief economist at Bluechip, Garett Jones, highlighted the importance of governance quality in their rating procedure. He noted,
“Piles of wealth invite predators of wealth, whether inside or outside the organization.”
However, Paolo Ardoino, the CTO of Tether, expressed his discontent with the rating through a tweet.
Stablecoin Ratings: The Highs and Lows
Interestingly, the ‘A’ rating for Binance USD comes despite an ongoing legal battle with the SEC. Gemini USD, another fully regulated stablecoin, also received the same high rating. Even Liquity USD (LUSD), known for its fluctuating peg, managed an ‘A’ grade.
Contrarily, Circle’s USD Coin (USDC), despite being centralized, was deemed ‘low risk’ due to its governance attributes, earning it a ‘B+’. DAI, the world’s third-largest stablecoin, celebrated a ‘B+’ rating as well, gaining points for its decentralization.
At the bottom of the list, Tron’s USDD received an ‘F’, reflecting concerns about stability and governance. TrueUSD (TUSD), recently in the spotlight, also received a low ‘D’ grade.
In the constantly shifting landscape of the stablecoin market, these ratings could provide crucial insights into how institutions view stablecoin stability and backing, potentially influencing the course of this dynamic sector.
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