Moody’s Gives RLUSD A2 and P-1 Deposit Ratings, Citing Treasury Reserves and Legal Gaps

Moody’s Gives RLUSD A2 and P-1 Deposit Ratings, Citing Treasury Reserves and Legal Gaps

by | Oct 29, 2026 | Altcoin

Ripple USD (RLUSD) received an A2 long-term deposit rating and a P-1 short-term deposit rating from Moody's Ratings on October 27, 2026, according to reporting published the following day. The grades make the dollar-backed token, issued by Ripple subsidiary Standard Custody & Trust Company, the first stablecoin to receive an investment-grade rating from the agency, according to Jack McDonald, Ripple's senior vice president of stablecoins.

Institutional risk teams now have a familiar credit framework for evaluating the token, and the assessment arrives as Ripple pushes deeper into regulated financial infrastructure. The ratings apply only to RLUSD that Standard Custody issues natively on the XRP Ledger and Ethereum, and the company requested the assessment itself.

Reserve quality anchors the RLUSD rating

Moody's built the grade largely around what backs the token. Treasury bills, other short-term U.S. government assets and cash make up most of RLUSD's reserves, and BNY holds the bulk of those assets in custody. That composition put reserve quality and ready access to liquidity at the center of the agency's analysis.

Standard Custody has set a 103% reserve coverage target for the token, a figure Moody's noted exceeds the minimum it ties to the rating. The agency also pointed to the burning of tokens before redemption payments, daily checks of reserve levels and monthly attestations from independent accountants as factors supporting the grades.

Redemption mechanics also factored in. Eligible institutional holders that Standard Custody has onboarded can redeem directly at par within two business days, giving them a clear path to turn the token back into dollars. That window covers the institutional setup Moody's reviewed rather than serving as an immediate redemption guarantee for all holders.

Moody's flagged two structural weak spots. The issuer, Standard Custody, lacks bankruptcy-remote status, and holders of RLUSD have no direct ownership claim on the assets backing their tokens at present. Even though the reserves sit apart from the issuer's own property, that separation does not completely shield the stablecoin if the issuer fails.

That distinction matters because high-quality Treasurys are one thing, while the legal rights holders have to those assets are another. Moody's said an issuer bankruptcy and the automatic stay that would follow could stretch the two-business-day redemption timeline, meaning redemptions could take longer if proceedings begin.

The agency pointed to the GENIUS Act, due to take effect in 2027, as a source of future protection. Moody's said the statute will keep required stablecoin reserves out of an issuer's bankruptcy estate, providing holders a legal safeguard they lack today. Giving holders a priority claim on the reserve could help lift the rating, while a weaker reserve mix, a lower-rated custodian or control failures could push it down.

Ripple's regulated structure expands

The grades build on Ripple's institutional campaign that began when RLUSD launched in December 2024 following approval from New York regulators. On October 26, the Office of the Comptroller of the Currency granted final approval for Ripple National Trust Bank, which will manage the stablecoin's reserves and act as their collateral trustee.

The new bank may provide fiduciary custody but cannot accept ordinary deposits or make loans. Standard Custody & Trust Company will remain the issuer under New York Department of Financial Services oversight, while the federal charter allows Ripple to offer RLUSD and XRP custody services through a federally regulated platform.

Standard Chartered started providing institutional custody of the token via its Dubai branch earlier this month. The bank also said it was collaborating with Ripple and LMAX Group on a collateral setup that would let clients use RLUSD without transferring it off the bank's balance sheet.

Market position and XRP disconnect

RLUSD carries a live supply of roughly $2.6 billion, placing it seventh among the top ten stablecoins by market capitalization but well behind USD Coin at $71.1 billion and Tether at $181.58 billion. Over the past 24 hours, the token's average trading volume fell by more than 52% to $171.4 million.

The Moody's grade gives RLUSD an advantage in attracting treasurers focused on credit quality, yet the stablecoin is still playing catch-up with larger rivals. Because stablecoin issuers generate revenue primarily from interest on reserves, the size gap translates directly into lower income, and the profits RLUSD does earn flow back to Ripple rather than token holders.

The rating has not lifted XRP, which was trading at $1.32, just below its 20-day average of $1.33 and down 11.3% over the past month. RLUSD holders on Ripple's network need only a small amount of XRP for account reserves and transaction fees, while those using the token on Ethereum or Base require none at all. No trading platforms, financial institutions or payment companies have pledged to purchase XRP or employ it in transactions following these developments.

The clearest signal for XRP holders would be a partner designating XRP as the bridge currency for RLUSD transfers, or Ripple demonstrating that the stablecoin's supply is expanding more rapidly on the XRP Ledger than on competing networks. Without that, RLUSD may keep growing independently of XRP.

Conclusion

Moody's A2 and P-1 ratings establish RLUSD as an investment-grade stablecoin backed by Treasury-heavy reserves and a defined institutional redemption process, while making clear that holders lack direct legal claims on those assets until the GENIUS Act takes effect in 2027. The next concrete step is the law's implementation, which Moody's said will exclude required reserves from an issuer's bankruptcy estate and could support an upgrade if paired with stronger holder protections.

Frequently Asked Questions

What ratings did Moody's assign to RLUSD on October 27, 2026?

Moody's assigned Ripple USD an A2 grade for long-term deposits and a P-1 grade for short-term deposits. A2 is the agency's sixth-highest long-term grade, indicating low credit risk, while P-1 is its highest short-term mark. The ratings apply only to RLUSD issued natively on the XRP Ledger and Ethereum by Standard Custody & Trust Company.

Moody's flagged that Standard Custody is not a bankruptcy-remote entity and that RLUSD holders currently have no direct ownership interest in the reserve assets. Although reserves are segregated from the issuer's proprietary assets, an issuer bankruptcy could trigger an automatic stay that stretches the two-business-day redemption timeline.

How does the GENIUS Act affect RLUSD's rating outlook?

The GENIUS Act is due to take effect in 2027. Moody's said the law will exclude required stablecoin reserves from an issuer's bankruptcy estate, giving holders a legal protection they do not currently have. The agency indicated that such statutory safeguards, along with arrangements giving holders a priority interest in reserves, could support an upgrade.

What role will Ripple National Trust Bank play in managing RLUSD reserves?

Ripple National Trust Bank received final OCC approval on October 26, 2026, and will manage RLUSD's reserves and act as their collateral trustee. The bank may provide fiduciary custody but cannot accept ordinary deposits or make loans. Standard Custody & Trust Company remains the issuer under New York Department of Financial Services oversight.

Why hasn't the Moody's rating lifted XRP's price?

XRP was trading at $1.32, down 11.3% over the past month, despite the rating news. RLUSD holders on Ripple's network need only small amounts of XRP for fees, while those on Ethereum or Base need none. No partners have committed to using XRP as a bridge asset for RLUSD transactions.

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