Moody’s rates Sky Protocol B3, its first stablecoin protocol rating

Key points

• Moody's assigned Sky Protocol a B3 issuer rating, stable outlook
• The Block says it is Moody's first rating of a stablecoin protocol
• S&P rated Sky B- in August 2025, citing weak capital buffers
• Galaxy added $100 million of sUSDS to its treasury last month

Moody’s Ratings has assigned Sky Protocol, the issuer of the USDS stablecoin, a B3 issuer rating with a stable outlook, according to The Block. The report, published Wednesday, said it is the first time the agency has rated a stablecoin protocol.

What the Moody’s rating means for Sky

B3 is a speculative-grade, or “junk,” rating on Moody’s scale. The Block reported that the rating covers Sky as an issuer. Sky operates USDS, and the protocol’s capital allocators access liquidity and deploy it across a range of strategies, the outlet said.

Sky says it is now the only stablecoin protocol formally rated by both Moody’s and S&P Global, according to The Block. S&P assigned Sky a B- rating in August 2025. The Block reported that S&P cited depositor concentration, centralized governance and weak capital buffers as constraints.

Moody’s has also moved more broadly into the sector. A search of trade coverage shows the agency introduced a stablecoin rating methodology in March 2026, according to Regulation Asia. The Block’s report did not detail the specific factors behind the Sky rating.

Sky’s response and institutional interest

Greg Feibus, global head of capital markets at the Sky Frontier Foundation, said independent ratings let institutional investors judge Sky “through frameworks they already use across global markets,” as quoted by The Block. He added that Sky recognizes the considerations Moody’s identified and remains focused on efforts to raise the level of Sky Reserves.

The Block tied the rating to growing institutional activity around USDS. It reported that last month Galaxy Digital:

• added $100 million of sUSDS, the savings version of USDS, to its corporate treasury;
• approved sUSDS as collateral across its institutional trading business; and
• bought an undisclosed amount of SKY tokens.

The outlet also reported that Standard Chartered recently projected that Sky’s USDS business, staking rewards and buybacks could raise income for token holders fivefold by 2028.

What to watch next

Credit ratings are one of the tools traditional institutions use to decide whether and how much to allocate to an asset or issuer. Two agencies now rate Sky, both in speculative-grade territory, with stable outlooks reported for each. Sky has said it is working to raise its reserve levels, which the S&P review identified as a weakness.

Neither agency’s rating changes how USDS is regulated, and the reports reviewed did not say whether Moody’s plans to rate other stablecoin protocols. Details of the full Moody’s rationale, including any triggers for an upgrade or downgrade, were not included in The Block’s summary.