International credit rating agency Moody's Ratings announced on October 27 that it had assigned Ripple's U.S. dollar stablecoin $RLUSD a long-term deposit rating of “A2” and a short-term deposit rating of “P-1,” reflecting its assessment of the credit risk associated with $RLUSD’s specific redemption obligations and ability to meet them.
The ratings apply to $RLUSD, natively issued on the XRP Ledger and Ethereum by Ripple subsidiary Standard Custody & Trust Company, and do not cover the Ripple Group or the XRP token.
Jack McDonald, senior vice president of Ripple’s stablecoin business, said $RLUSD is the first stablecoin to receive an investment-grade rating from Moody’s, adding that the milestone could help boost institutional market confidence in digital assets.
$RLUSD receives A2 and P-1 ratings, applicable only to specific issuance obligations
According to a report by The Block, Moody’s assigned $RLUSD an A2 long-term deposit rating and a P-1 short-term deposit rating under its stablecoin rating methodology published in March this year.
A2 is in the upper-medium tier of Moody’s long-term credit ratings, indicating relatively low credit risk and falling within investment grade. P-1 is Moody’s highest short-term credit rating, reflecting its assessment of short-term repayment capacity.
Notably, although Moody’s uses the term “Deposit Rating,” $RLUSD remains a U.S. dollar stablecoin, not a bank deposit insured by the Federal Deposit Insurance Corporation (FDIC).
The ratings primarily assess whether Standard Custody & Trust Company can meet its obligations related to issuing and redeeming $RLUSD for U.S. dollars. They do not extend to the overall financial creditworthiness of Ripple Labs, the banking operations of Ripple National Trust Bank (RNTB), or the XRP token itself.
Furthermore, tokens created through cross-chain transfers or other mechanisms cannot automatically be assumed to have the same ratings. A2 and P-1 correspond to credit risks over different time horizons and do not mean that Moody’s guarantees $RLUSD will always maintain a price of $1 on the secondary market.
103% reserve coverage ratio is key as Moody’s recognizes asset quality and redemption arrangements
Moody’s said the $RLUSD ratings primarily consider the credit quality and liquidity of reserve assets, the level of reserve coverage, and the issuer’s redemption arrangements.
$RLUSD’s reserve assets currently consist mainly of short-term U.S. Treasury securities, other short-term U.S. government assets, and cash. Most of the reserves are held in custody by BNY Mellon. Standard Custody & Trust Company has set a reserve coverage target of 103%, equivalent to holding approximately $103 in eligible reserve assets for every $100 worth of $RLUSD issued.
Moody’s believes this target is above the minimum coverage level required for the corresponding rating and helps buffer against changes in reserve asset prices and redemption pressure. However, 103% is a target set by the issuer, and the actual coverage ratio may vary with changes in asset values and circulating supply.
Under the redemption arrangements, eligible institutional clients who have completed account-opening checks can apply to the issuer to redeem their tokens for U.S. dollars at a 1:1 ratio, subject to the relevant terms. Users who hold $RLUSD through exchanges or other platforms must trade or redeem it according to the terms of the relevant service provider.
Moody’s highlights bankruptcy protections; GENIUS Act may affect future ratings
Despite $RLUSD receiving investment-grade ratings, Moody’s noted that aspects of the issuer’s current legal structure need improvement. Standard Custody & Trust Company is not a special purpose entity with comprehensive bankruptcy-remote arrangements, and $RLUSD holders do not yet have direct ownership of the reserve assets.
Although the reserve assets are managed separately from the issuer’s own assets and are regulated by the New York State Department of Financial Services (NYDFS), holders could still face redemption delays and related legal proceedings if the issuer enters bankruptcy proceedings.
Moody’s believes that once the U.S. GENIUS Act is expected to take effect in 2027, it will further strengthen reserve management and holder protections for payment stablecoins, including establishing clearer rules for handling reserve assets if an issuer becomes bankrupt.
If $RLUSD holders gain stronger priority claims in the future, or the reserve assets receive greater legal protection, these could support a rating upgrade.
Conversely, deterioration in the quality of reserve assets, a decline in the coverage ratio, or significant problems with the issuer’s liquidity or operational controls could negatively affect the ratings.
Ripple expands institutional finance footprint, with credit ratings offering an additional basis for review
Moody’s announcement of ratings for $RLUSD comes as Ripple accelerates its expansion into institutional financial services.
On October 26, the Office of the Comptroller of the Currency (OCC) granted final approval to the national trust bank charter application for Ripple’s RNTB. Under the approved scope of business, RNTB may manage the segregated reserve assets backing $RLUSD and provide digital asset custody services subject to fiduciary duties.
Related news: Ripple secures a federal trust bank charter! Integrating RLUSD and AI to launch an around-the-clock treasury management platform
However, $RLUSD is still issued by Standard Custody & Trust Company. The OCC’s charter approval and Moody’s credit ratings are separate processes, concerning banking regulation and credit risk assessment, respectively. Meanwhile, since its launch in December 2024, $RLUSD’s circulating market capitalization has reached approximately $2.5 billion, and it is gradually being adopted in Ripple’s cross-border payments and institutional trading services.
On October 28, Coinbase also announced expanded support for $RLUSD, adding it to its retail trading, exchange, and institutional service platforms and giving the market more ways to access the stablecoin. For financial institutions, Moody’s ratings provide a third-party reference for analyzing $RLUSD’s reserve quality, legal structure, and redemption capacity, helping banks, asset managers, and companies conduct internal risk reviews.
However, whether to include $RLUSD in payment, settlement, or collateral operations still depends on each institution’s risk management policies, regulatory requirements, and technical integration capabilities.
As traditional credit rating agencies gradually develop frameworks for evaluating stablecoins, reserve transparency, legal protections, and actual repayment capacity will also become important criteria for institutions assessing the financial uses of digital assets.
“Moody’s rates a stablecoin! RLUSD receives an A2 investment-grade credit rating, marking a new chapter in crypto market history” was first published by “Crypto City”