In Industry First, S&P Gives Compound Prime Junk Credit Rating

Crypto industry participants expect credit raters to increase their scrutiny of DeFi firms as institutional interest in the space continues to grow

article-image

Source: Shutterstock

share

key takeaways

  • The DeFi protocol is the first to receive a credit rating from S&P Global Ratings
  • Low capital base, increasing regulatory scrutiny and return obligations were areas of concern for credit raters

The first institutional DeFi company rated by S&P Global received a B-, or junk, grade.

S&P Global Ratings has assigned Compound Prime a B- long-term credit rating. It is the first time an institutional DeFi (decentralized finance) offering has been rated by the agency, 

Compound Prime, a Compound Labs subsidiary, has a stable outlook, but ratings issuers cited uncertain regulatory conditions around stablecoins and Compound Treasury’s currently “very low” capital base — as well as its 4% return obligation — as concerns.

Compound Prime oversees Compound Treasury, the company’s security offering that converts US dollars to stablecoin USDC and secures accredited investors a 4% return, according to Reid Cuming, Compound Treasury’s general manager. 

The Treasury offering was first announced in June 2021. 

A B- rating, a junk rating six levels below investment grade, means the business is more vulnerable to adverse financial conditions, although it “currently has capacity to meet financial obligations,” S&P Global Ratings said in its explanation.

“As part of ongoing discussions with S&P, Compound Treasury’s ratings could be upgraded in upside scenarios such as greater regulatory clarity for the digital asset industry, or a longer track record of stable performance,” Cuming said in a statement.

S&P choosing to assign a DeFi protocol a rating, which Compound said is a first, shows that greater adoption is coming, Cuming said. 

“Over time, traditional financial markets and DeFi will converge,” Robert Leshner, Compound’s founder, tweeted. “Compound Treasury is one of the products accelerating this transition, by offering institutions a cash-management product powered by the Compound protocol.”

Ratings will become more common, Lesher added, which will help to foster institutional demand.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

The $135 million raise shows that TradFi giants are serious about crypto adoption

article-image

The banking system still processes payments like it’s 1975. Crypto might have a fix.

article-image

Fiserv’s launch follows Senate passage of the GENIUS Act for stablecoin regulation.

article-image

Bitcoin is emerging as “the new standard for long-term corporate resilience,” Swan Bitcoin CIO says

article-image

Cybersecurity experts explain how the attack could have been prevented