Moody’s Assigns Ripple’s RLUSD A2 Long-Term, P-1 Short-Term Deposit Ratings
Summary
- Moody’s said it assigned Ripple’s U.S. dollar stablecoin RLUSD an A2 long-term deposit rating and a P-1 short-term deposit rating.
- Moody’s said RLUSD reserves consist of highly liquid short-term U.S. Treasuries and cash, and that the token targets a 103% reserve coverage ratio.
- Moody’s said a potential delay in RLUSD redemptions in the event of an issuer bankruptcy, along with legal protections, reserve asset quality, redemption capacity, and operational or cybersecurity incidents, could affect the rating.
Forecast Trend Report by Period
Moody’s, the global credit ratings firm, has assigned Ripple’s U.S. dollar stablecoin RLUSD an A2 long-term deposit rating and a P-1 short-term deposit rating.
The Defiant reported on October 28 that Moody’s announced the deposit ratings on October 27. The ratings apply to RLUSD issued by Ripple on the XRP Ledger and Ethereum.
An A2 rating is in the upper-medium grade category and indicates low credit risk. P-1 is Moody’s highest short-term rating.
Moody’s said RLUSD’s reserves consist mainly of highly liquid short-term U.S. Treasuries and cash. RLUSD targets a reserve coverage ratio of 103%. Most reserve assets are held in custody by BNY.
Institutional clients that meet redemption requirements and complete registration can receive par value within two business days of submitting a redemption request. Factors supporting the rating include burning tokens before redemption payments are made, daily reserve verification and independent monthly accounting attestations.
Moody’s said the structure does not fully insulate the stablecoin from the effects of an issuer bankruptcy, even if reserves are segregated from the issuer’s own assets. RLUSD holders do not have a direct ownership claim on the reserves, meaning redemptions could take longer than two business days if bankruptcy proceedings begin.
Moody’s said stronger legal protections could support an upgrade. A decline in reserve asset quality or coverage, weaker redemption capacity, or a major operational or cybersecurity incident could lead to a downgrade.
