Key Highlights:
- Ripple’s $RLUSD has secured the first-ever investment-grade deposit rating from credit rating agency Moody’s.
- Reserve architecture maintained by SCTC targets a 103% overcollateralization ratio, backed by cash and short-duration U.S. government assets primarily custodied with The Bank of New York Mellon.
- Distribution of the stablecoin is expanding rapidly across premier platforms, including Robinhood, Coinbase Prime, Coinbase Exchange, and retail channels.
Ripple has reached a major regulatory and institutional milestone for its dollar-pegged stablecoin, $RLUSD. Jack McDonald, Ripple’s senior vice president of stablecoins, discussed $RLUSD’s Moody’s ratings in an Oct. 27 post on X stating:
“$RLUSD is the first stablecoin to have ever received an investment-grade Moody’s rating.”
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The achievement follows earlier industry recognition from Bluechip, an independent stablecoin rating agency, which assigned $RLUSD an “A” rating alongside a first-place stablecoin ranking on July 18, 2025, using its dedicated stablecoin risk framework. In contrast, Moody’s evaluated $RLUSD under its deposit rating methodology. The milestone stands out sharply against other industry assessments; earlier this month, Moody’s issued its first protocol rating to Sky Protocol (formerly MakerDAO, issuer of USDS and $DAI), assigning it a B3 long-term counterparty risk rating. Moody’s considers B-rated obligations to be speculative and subject to high credit risk, evaluating Sky as an entity with USDS and $DAI treated as liabilities rather than rating the individual tokens.
Reserve Structure, Custody, and Par Redemption Mechanics
The credit profile of $RLUSD is anchored by conservative reserve management overseen by SCTC. According to Moody’s, SCTC targets reserve holdings equal to 103% of outstanding $RLUSD obligations, surpassing the baseline coverage threshold demanded for its rating tier. These reserves consist largely of highly liquid, short-duration U.S. government debt and cash balances, held predominantly with The Bank of New York Mellon (BNY).
Under this operational framework, cash held at a secondary depository institution is capped at $50 million, underpinned by an additional $50 million in U.S. Treasury bills held separately at BNY. In parallel with the credit evaluation, Ripple and BNY revealed on Oct. 27 an expanded custody agreement allowing BNY to hold $XRP and $RLUSD for institutional clients. Properly onboarded and eligible institutions can redeem $RLUSD at par ($1 face value) within two full business days following a verified order, an operational timeline sustained by weekly liquidity stress tests.
Operational Safeguards, Insolvency Considerations, and Market Rollout
SCTC enforces multiple operational controls to eliminate issuance risks. These measures mandate full asset funding prior to minting, token destruction before releasing redemption payments, daily reconciliations, multi-signature controls, third-party smart contract reviews, and monthly CPA attestations. However, Moody’s pointed out that issuer bankruptcy presents a risk for timely redemptions. Because SCTC is not structured as a bankruptcy-remote special-purpose entity (SPE) and tokenholders lack direct legal ownership of reserve assets, an automatic stay during insolvency proceedings could pause disbursements.
Moody’s indicated that enhanced legal firewalls could prompt future rating upgrades, noting that the GENIUS Act—slated to take effect in 2027—is anticipated to bolster holder protections by explicitly excluding mandated stablecoin reserves from an issuer’s bankruptcy estate. Concurrently, $RLUSD is executing an aggressive distribution strategy. Robinhood is targeting app integration for $RLUSD later this year, while Ripple announced on Oct. 28 that the token is rolling out on Coinbase Prime, Coinbase Exchange, and the retail Coinbase app, with Coinbase Global Exchange availability slated for a later stage.
Why This Matters
Moody’s validation of $RLUSD marks a pivotal turning point in the integration of digital assets with traditional capital markets. By securing an investment-grade rating, Ripple addresses the strict risk-mandates and fiduciary obligations required by institutional asset managers, corporate treasuries, and traditional banks. With tier-one custody via The Bank of New York Mellon and retail-to-institutional distribution across Coinbase and Robinhood, $RLUSD provides a blueprint for how future stablecoins must navigate credit scrutiny, custody segregation, and regulatory evolution under forthcoming frameworks like the GENIUS Act.
Frequently Asked Questions
What makes the Moody’s rating for $RLUSD historic?
As confirmed by Ripple senior vice president Jack McDonald, $RLUSD is the first stablecoin to obtain an investment-grade rating from Moody’s. While Moody’s previously assigned a speculative B3 counterparty rating to Sky Protocol as an organization, $RLUSD received an investment-grade deposit rating for its asset backing.
Where are the reserves backing Ripple’s $RLUSD held?
The reserves are held primarily with The Bank of New York Mellon (BNY) and target a 103% backing ratio relative to liabilities. The assets predominantly consist of cash and short-duration U.S. government obligations. Any cash stationed at an outside depository institution is capped at $50 million, backed by an equivalent $50 million in Treasury bills kept at BNY.
What platforms are listing and distributing $RLUSD?
Ripple has established distribution agreements with major digital asset venues. Following its rollout across Coinbase Prime, Coinbase Exchange, and Coinbase’s retail app on Oct. 28, the stablecoin is slated for future launch on the Coinbase Global Exchange and an upcoming retail integration on Robinhood.
