Compound's Corporate Division Earns First Standard & Poor's Credit Rating in DeFi

"[This] marks a huge step forward in the maturity of the crypto industry as traditional institutions begin to assess the risks of digital asset-driven financial solutions," Reid said Coming, managing director of Compound Treasury, in a blog post.

Cuming described the achievement as a "translation mechanism" for universities interested in getting involved with DeFi.

"What's really interesting and important is that it demonstrates that DeFi can be quantified, weighed, and incorporated into more standard financial risk procedures, as well as understood by traditional finance," Cuming said in an interview.

Compound Treasury will launch in June 2021 and is designed to cater to cryptocurrency-savvy businesses seeking a return on their capital reserves. The account offers a 4 percent annual interest rate on deposits of the stablecoin USDC, is classified as a security and is only available to approved institutional clients, according to the product's website.

According to Standard & Poor's, Treasury has yet to gain a foothold, with "only 20 clients and $180 million invested as of the end of April." In contrast, Compound's core DeFi lending platform now has more than $5 billion in total value locked (TVL) crypto assets.

"In our view, key rating weaknesses include the company's very low capital base, regulatory risk associated with cryptocurrencies, significant operational risk and complexity, and convertibility risk Standard & Poor's wrote.