BREAKING: S&P Global Shocks Markets with First-Ever B- Rating for DeFi’s Sky Protocol

Wall Street's sleeping giant just woke up—and it's holding a flamethrower.

S&P Global dropped a financial grenade today, assigning Sky Protocol the first-ever B- credit rating in DeFi history. Not quite junk status, but close enough to smell the dumpster fire.

The rating that rattled crypto:

Traditional finance finally acknowledged DeFi's existence—with the equivalent of a pat on the head and 'nice try, kid.' The B- puts Sky Protocol somewhere between Venezuelan bonds and your cousin's NFT 'startup.'

Why this matters:

This isn't just a rating—it's a Trojan horse. Institutional money needs these stamps of approval before diving in. Now watch as hedge funds use it as both validation and leverage to demand better terms.

The cynical take:

Of course S&P moved now—just in time to sell their new 'DeFi Risk Assessment' consulting services at $500k per report. The house always wins.

One thing's clear: The old guard just drew a line in the sand. DeFi's response? Probably to build a blockchain bridge over it.

S&P Rates USDS ‘Constrained’ With Score of 4 in First Evaluation

In its first evaluation, S&P gave USDS a “4” on its stability scale — labeled “constrained” — for maintaining its dollar peg.

Sky Protocol, a decentralized lending platform, facilitates crypto-backed loans and uses USDS to support lending and borrowing activity.

USDS ranks as the fourth-largest stablecoin by market cap, with $5.36 billion in circulation, according to CoinMarketCap.

S&P defines a default in this context as a “haircut imposed on token holders.”

The agency highlighted potential triggers, such as mass withdrawals exceeding available liquidity or credit losses outpacing capital reserves.

S&P Global Ratings has published its first-credit rating for any stablecoin system: Sky Protocol. pic.twitter.com/xiQE8YyecG

Weaknesses flagged include high depositor concentration, centralized governance, reliance on founder RUNE Christensen, regulatory uncertainty, and limited capitalization, its risk-adjusted capital ratio was just 0.4% as of July 27.

Andrew O’Neil, S&P’s digital assets analytical lead, told Cointelegraph that a B- rating indicates the protocol “can meet its financial obligations” but remains “vulnerable in adverse business, financial and economic conditions.”

The governance issue was underscored by S&P’s observation that decision-making remains highly centralized, partly due to low voter participation, despite Christensen holding nearly 9% of governance tokens.

Sky’s Asset-Liability Committee said the review allowed it to re-examine traditional counterparty risk models and assess DeFi-specific risks such as smart contract vulnerabilities, oracle dependencies, bridge security, and governance issues.

These were identified as areas requiring ongoing monitoring and mitigation.

The rating also lowered Sky’s anchor score to “bb,” four notches below the U.S. banking anchor of “bbb+,” citing the broader regulatory uncertainty facing DeFi.

S&P Ranks USDC Strong, Puts USDT and USDS in ‘Constrained’ Category

S&P’s stablecoin assessment ranked Circle’s USDC at 2 (strong), Tether’s USDT at 4 (constrained), and USDS also at 4, with O’Neil noting that Tether’s main issue is transparency while USDS faces complexity in its asset base and weaker capital reserves.

S&P launched its stablecoin stability framework in December 2023, and in June, awarded its first blockchain-based mortgage securitization, by Figure Technology Solutions, an AAA rating for a $355 million pool of mortgage assets.

Globally, stablecoin regulation is accelerating. In the US, President Donald Trump signed the first federal stablecoin bill on July 18, calling it a “giant step” toward securing American dominance in global finance and crypto technology.

As reproted, Western Union is positioning itself for a new phase of digital transformation, signaling strong interest in using stablecoins to modernize its global remittance operations.