Compound Treasury Receives B- Credit Rating from S&P Global Ratings

On Monday, decentralized finance protocol Compound Treasury announced that it received a B- credit rating from S&P Global Ratings. As the Compound team stated, this is the first time a major credit agency has rated an institutionalized DeFi protocol. S&P Global Ratings' investment suitability grades range from AAA (very strong) to D (default). A score of B - indicates that the issuer is able to meet financial commitments, but vulnerabilities in corporate, financial and economic conditions remain.

Regarding Compound’s rating, S&P Global Ratings cited uncertain stablecoin regulatory regimes such as USDC, stablecoin-to-fiat convertibility risks, and the Treasury’s “limited capital base” and 4.00% annual return obligation. However, the ratings agency said that the Compound protocol’s record of zero losses measured in USDC partially reduces issuance risk.

Regarding this development, Reid Cuming, managing director of Compound Treasury, said: "S&P's ratings help our institutional clients more easily understand the opportunities and risks of cryptocurrency cash management." As part of the discussion, Compound Treasury's rating could be upgraded if there is greater regulatory transparency for digital assets, or a longer track record of consistent performance.

Compound Treasury and its yield are powered by its underlying DeFi lending Compound protocol. At press time, 301,650 providers have injected $6.94 billion worth of digital assets into the protocol, while 9,275 borrowers have secured loans worth $1.83 billion. While higher than savings rates at major U.S. banks, Compound Treasury's yield is only available to accredited investors or those who meet high income and net worth thresholds.