Moody’s has rated a crypto dollar for the first time. The grade says high credit risk. Here is why.

A stablecoin is a digital token designed to always be worth one US dollar. People use stablecoins to send money across borders, to hold dollars without a domiciliary account, and to keep savings away from a weakening local currency. The best-known ones, USDT and USDC, are issued by companies. USDS and DAI are different. They are created by Sky, formerly known as MakerDAO, a network run by computer code and governed by votes of the people who hold its SKY token.

What did Moody’s decide?

On 6 October 2026, Moody’s Ratings assigned Sky a B3 long-term counterparty risk rating with a stable outlook.[2] It is the first rating Moody’s has given to a stablecoin network.[1] A counterparty risk rating is Moody’s view of how likely an organisation is to honour what it owes to the people and firms it deals with.

B3 sits in what Moody’s calls speculative grade, the part of its scale that signals high credit risk.[2] Sky is now rated by two of the big agencies. S&P Global first gave it a B- in August 2025 and reaffirmed that grade with a stable outlook on 1 October 2026.[2] Sky says it is the only stablecoin network formally rated by both.[1]

Why such a low grade?

The heart of it is capital. Capital is the money an organisation has of its own, beyond what it owes, that can absorb losses before the people holding its coins are hit. As of September, Sky had about $90 million of what Moody’s calls tangible common equity against roughly $10 billion of managed assets.[3] That is a cushion of about 0.9% (derived). Moody’s called it a “material credit weakness”.[3]

In everyday terms: for every ₦100 of value Sky manages, it has less than ₦1 of its own money to absorb a loss. Beyond that, the people holding the coins carry the risk.

Moody’s also pointed to stablecoin liabilities that are sensitive to confidence. If holders lose faith and rush to swap their coins for dollars, Sky must meet those requests quickly.[3] It flagged risks tied to the network’s structure as well: computer code that could fail, governance by token vote, legal and regulatory uncertainty, and the absence of audited financial statements, formal incorporation, employees, officers or directors.[3]

What did Moody’s like?

The rating is not all bad news. Moody’s credited Sky with a solid, if limited, operating history, liquid holdings, low historical losses and solid profits relative to its risks.[3] Sky has recorded about $15 million in cumulative losses since 2020.[3] Roughly 45% to 50% of its assets are other stablecoins and tokenised money-market funds, which hold short-term US government debt, and about 25% are loans backed by crypto.[3]

Equity as a share of assets derived by RainingMoney. Sources 2 and 3.

About $4.92 billion of the backing sits in USDC and tokenised Treasury money-market funds, roughly half the coins in circulation.[2] So a large part of Sky’s safety depends on other issuers staying safe. One risk named in analysis of the rating is a rush of demand for USDC that exceeds what Sky holds in its Peg Stability Module, the facility that lets users swap USDS for USDC one-for-one.[2]

What happens if losses exceed the cushion?

Sky has a backstop written into its rules. If losses ran past its capital, the network would create new governance tokens and try to sell them to raise money. If that failed, the value of USDS and DAI could be written down, meaning holders would get less than a dollar for each coin.[3] That is the scenario the rating is pricing.

Sky’s own reserves stood at $76.99 million at the end of August, against a target of $150 million set by its token holders.[2] That is about 51% of the target (derived). Moody’s noted the target too: Sky’s governance aims for $150 million of equity over the medium term.[3]

What would move the rating?

Moody’s set clear triggers. An upgrade becomes possible if capital, measured as equity against managed assets, stays above 2.5% while profits, liquidity and asset quality hold up.[3] At today’s size of about $10 billion, that means roughly $250 million of equity (derived), close to three times what Sky has now. A downgrade could follow if the ratio fell below 0.5%, if Sky posted losses in consecutive quarters, or if its liquidity weakened.[3]

Why are big investors paying attention anyway?

A low grade is still a grade, and that matters to large investors. Many funds can only hold assets they can measure with tools they already use. Greg Feibus, global head of capital markets at the Sky Frontier Foundation, said ratings “allow institutional investors to assess Sky through frameworks they already use across global markets”.[1] In September, the crypto firm Galaxy added $100 million of sUSDS, the interest-earning version of USDS, to its corporate treasury and began accepting it as collateral.[1]

Why it reaches Nigeria

Nigeria is one of the world’s biggest users of crypto. In the year to June 2025, Nigerians received $92.1 billion in crypto value, the most in sub-Saharan Africa, according to the blockchain analysts Chainalysis.[4] Across the region, stablecoins made up 43% of crypto transaction volume.[4] Much of that is people using digital dollars as a savings account, or as a payment route when the naira and bank transfers fall short.

Most Nigerian users hold company-issued coins rather than USDS or DAI. But the questions Moody’s asked of Sky apply to every digital dollar: what backs it, how big the cushion is, who makes the decisions, and what happens on a bad day. Company-issued coins publish reserve reports rather than credit ratings, and the two are not the same test.