Moody's Ratings assigned Sky Protocol a B3 issuer rating with a stable outlook on October 7, 2026, marking the first time the agency has rated a stablecoin protocol. A stable outlook is an agency's signal that it does not expect the grade to change in the near term. The assessment gives the issuer of the USDS dollar stablecoin a second score from a major rating agency, a step that matters for institutional investors who have been weighing exposure to the protocol.

The only stablecoin protocol rated by two major agencies

According to the company's announcement, Sky said the B3 score from Moody's makes it the only stablecoin protocol rated by both Moody's and S&P Global. The B3 grade is equivalent to the "B-" that S&P Global assigned Sky in August 2025, as detailed in the agency's credit approach to the protocol. Both marks sit in non-investment-grade territory, six notches below the Baa3 and BBB- thresholds where investment grade ends.

Sky characterized the rating as an endorsement rather a warning about future events. Greg Feibus, the firm's Global Head of Capital Markets, stated: "The value of independent credit ratings is that they allow institutional investors to assess Sky through frameworks they already use across global markets." He added that receiving multiple independent assessments only serves to strengthen Sky's credit profile in the eyes of institutional investors.

What S&P flagged the year before

Moody's latest rating echoes familiar themes. When S&P rated Sky B- in August 2025, it cited the protocol's high depositor concentration, highly centralized governance, and weak risk-adjusted capitalization.

The agency noted that Sky founder Rune Christensen held up to 9% of the protocol's governance tokens, a stake S&P said gave him enormous influence over Sky's future, particularly given extremely low voter turnout. S&P also flagged Sky's 0.4% risk-adjusted capital ratio and thin surplus buffer as a "noteworthy weakness," and said an upgrade was not realistic within the following 12 months.

Some reports framed the grade in blunter terms: a B- rating places USDS and DAI on roughly the same footing as government bonds from the Democratic Republic of the Congo, as DL News reported. Any debt rated below BBB- falls into high-yield, or junk, territory.

Why institutions are interested anyway

The ratings arrive as institutional investors strengthen their ties with Sky. In late September, Galaxy Digital added $100 million of sUSDS, the savings version of USDS, to its corporate treasury. The firm also approved USDS as collateral across its institutional lending desk and purchased an undisclosed amount of the SKY governance token.

Feibus linked Galaxy's interest to S&P's 2025 rating. Standard Chartered has also taken a favorable view of Sky's USDS, with the bank projecting 5x returns for token holders by 2028.

The reserve problem Sky is looking to fix

Both Moody's and S&P noted challenges with Sky's reserves in their scorecards. The protocol has begun taking action, however. In March of this year, Sky's governing cooperative voted to slash its daily buyback program by 87% and redirect the funds toward its backstop buffer, as previously reported.

It remains to be seen whether the move will shift either agency's assessment. S&P has said it plans to raise Sky's rating if it sees improvement in governance concentration, thin capital, and depositor concentration. Until then, the market watches.