Moody’s gives Sky Protocol a B3 rating, echoing S&P’s junk grade

On October 7, 2026, Moody’s Ratings scored Sky Protocol a B3 issuer rating with a stable outlook. 

This happens to be the first-ever rating the agency has assigned to a stablecoin protocol. This is an important move to institutional investors who may be sitting on the fence as regards USDS, because it gives the dollar stablecoin issuer a score from a second major agency.

The only protocol scored by two major agencies

Sky announced that the B3 score by Moody’s means it’s the only stablecoin protocol rated by Moody’s and S&P Global. The B3 grade is on par with the “B-“that S&P scored Sky in August 2025. B3 is a non-investment-grade mark.  

The protocol saw the rating as a pat on the back rather than a warning about any future occurrence. 

Greg Feibus, who serves as the Global Head of Capital Markets at the firm, stated that “The value of independent credit ratings is that they allow institutional investors to assess Sky through frameworks they already use across global markets.” 

He opined that Sky attaining multiple assessments only serves to strengthen Sky’s credit profile in the eyes of institutional investors.  

What S&P flagged a year prior

The latest rating by Moody’s comes with some familiar narratives. S&P rated Sky a B- in August last year, and when it did so, it noted Sky’s high depositor concentration, highly centralized governance, and weak risk-adjusted capitalization. 

In fact, Sky’s founder, Rune Christensen, had up to 9% of the protocol’s governance tokens, which S&P felt gave him enormous influence over Sky’s future, especially with extremely low voter turnout. 

Also, Sky’s 0.4% risk-adjusted capital ratio and thin surplus buffer were flagged by S&P as a “noteworthy weakness,” and predicted an upgrade wasn’t realistic in the next 12 months. 

Reports framed the grade in blunter terms: a B- rating makes USDS and DAI somewhat on the same level as government bonds from the Democratic Republic of the Congo. Any debt with a rating below BBB- is pretty much high-yield or junk.

Why institutions are interested anyway

The ratings come at a good time; they come as institutional investors strengthen their bond with Sky. 

Galaxy Digital saw that $100 million of sUSDS (the savings version of USDS) was added to its corporate treasury. It went on to approve USDS as collateral throughout its institutional lending desk and purchased an unknown amount of the SKY governance token. All of this happened in late September.

Feibus linked the interest from Galaxy to the S&P rating from 2025. Standard Chartered’s projection for Sky’s USDS is a favorable one, with the bank predicting 5x returns for token holders by 2028. 

The reserve problem Sky is looking to fix

Sky seems to have a challenge with its reserves, as both Moody’s and S&P noted in their scorecards. The protocol seems to be taking action; however. 

In March of this year, there was a vote by the governing cooperative of the protocol to slash its daily buyback program by 87% and to redistribute funds towards its backstop buffer.

It remains to be seen if such a move will move the needle with both agencies. S&P plans to increase Sky’s rating if it sees improvement in governance concentration, thin capital, and depositor concentration. Until then, we wait.