The Stability Standard for Stablecoins.

Stablemark’s Stablecoin Framework is based on credit risk principles, a UK‑focused methodology for assessing the stability, operational resilience, and regulatory‑alignment of fiat‑backed stablecoins. The framework evaluates reserve‑asset quality, liquidity and redemption risk, operational and technological controls, governance, and regulatory‑compliance posture,

then assigns a Stablemark Stability Score (SSS) that reflects the likelihood of a stablecoin maintaining its peg and meeting redemption obligations under stress.

Reserve‑asset quality is treated as the primary driver of stability risk, following a conservative “weakest‑link” logic: the lowest‑rated asset in the reserve pool can cap the overall Stability Score. The methodology applies an asset‑class hierarchy(e.g., unremunerated central‑bank deposits, short‑duration sovereign debt, high‑quality commercial paper, and higher‑risk instruments) and checks whether backing is fully funded, segregated, and subject to independent safeguarding and audit. For sterling‑denominated stablecoins, the framework places particular emphasis on currency‑matched, short‑duration backing aligned with Bank of England proposals for systemic stablecoins.

Liquidity and redemption risk are assessed through redemption‑mechanism design, liquidity‑buffer sizing, and stress‑testing assumptions (e.g., large‑scale outflows, market‑shock scenarios), benchmarked against FCA expectations for safeguarding and operational resilience. Operational and technological risk is evaluated via custody arrangements, smart‑contract audit history, upgradeability, and cybersecurity controls, with a focus on resilience in payment‑system‑adjacent infrastructure. Governance and transparency are scored on board oversight, risk‑committee structures, disclosure frequency, and third‑party attestation (e.g., accountants, auditors, legal opinions).

Finally, the framework maps each stablecoin against FCA expectations for non‑systemic stablecoins (MLRs, safeguarding, AML/CTF, financial‑promotions) and the Bank of England’s proposed regime for systemic sterling‑denominated stablecoins (backing‑asset composition, capital‑like buffers, redemption obligations). The resulting Stability Score provides a structured, risk‑adjusted benchmark for issuers, regulated firms, and investors evaluating stablecoin‑integration decisions.

Stablemark assigns each stablecoin one of three Stability Score bands, reflecting its overall resilience and regulatory‑alignment under UK‑style expectations:

SSS‑A – Highest stability

Fully backed by high‑quality, liquid assets (e.g., BoE deposits, short‑duration UK gilts) with minimal credit and market‑value risk; robust liquidity and redemption mechanisms; strong governance and full alignment with FCA safeguarding and AML/CTF expectations and BoE systemic‑stablecoin proposals. Suitable for core payments, settlement, and systemic‑ready use cases.

SSS‑B – Medium stability

Predominantly high‑quality backing but with moderate liquidity, operational, or governance gaps; broadly compliant with current FCA rules but not yet fully systemic‑ready. May require additional mitigants (e.g., caps, monitoring, or fallback arrangements) for integration into regulated workflows.

SSS‑C – Lower stability

Mixed‑quality backing, weaker liquidity, or notable governance/operational concerns; may fall short of key FCA safeguarding or BoE systemic‑proposals (e.g., insufficient high‑quality liquid assets, opaque redemption mechanics, or weak custody). Users should treat these as higher‑risk, subject to enhanced due‑diligence and ongoing monitoring.

Each score is accompanied by a Stability Profile detailing the key risk factors, reserve‑composition breakdown, and mapping to FCA and BoE expectations, enabling firms to make informed, risk‑proportionate stablecoin‑integration decisions.