Compound Finance’s Treasury Receives a B- credit rating from S&P Global Ratings


Quick take:

  • Compound Finance’s Treasury has received a B- credit rating from S&P Global Ratings
  • This makes Compound Finance the first institutional DeFi offering to be rated by such a credit agency
  • Traditional institutions have begun to weigh the significance of DeFi services
  • Regulatory clarity could increase Compound Finance’s ratings and see more DeFi protocols get similar recognition

Compound Finance’s Treasury has just received a B- credit rating from S&P Global Ratings. The latter is an American credit rating agency with over 150 years of experience. It publishes financial research and analyses on stocks, bonds, and commodities. S&P Global Ratings is a subsidiary of S&P Global.

Compound Treasury’s Rating is a First for DeFi

The B- rating makes Compound Treasury the first institutional DeFi offering to be rated by a traditional credit rating agency of the magnitude of S&P Global Ratings. It also signals considerable progress in crypto’s DeFi industry as institutions have started to weigh the significance of services offered by such protocols.

According to the team at S&P Global Ratings, Compound Treasury is stable, thus ‘reflecting an expectation of limited loan losses on the platform.’ Furthermore, the B- rating factors in the ongoing regulatory uncertainty surrounding stablecoins such as USDC, stablecoin-to-fiat convertibility risks, and Compound Treasury’s ‘currently limited capital base and 4.00% return obligation.’

Compound Treasury’s Ratings Could be Upgraded

Additionally, the team at S&P Global Ratings hinted that Compound Treasury’s rating could be upgraded in the event of regulatory clarity for the digital asset industry or ‘a longer track record of stable performance.’ This, in turn, means that the credit agency could rate additional DeFi protocols in the near future.

More on Compound Treasury

Compound Treasury is a digital asset-powered cash management solution tailor-made for institutional investors. It was launched in June 2021 by Compound Labs, the parent company of Compound Finance, to provide access to the protocol to businesses and financial institutions. Accredited investors can earn up to 4% on USD and USDC through Compound Treasury.

Compound Treasury’s vision is to become ‘the bridge for non-crypto financial institutions to deliver the core benefits of DeFi to the next billion users.’

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