Ripple's stablecoin RLUSD has received an investment-grade rating from global credit ratings agency Moody's. Its reserve structure centered on cash and short-term U.S. Treasuries and a custody framework involving major financial institutions received a positive assessment. But Moody's pointed to a limitation, saying the coin is not fully legally separated from the issuer's bankruptcy risk.

On Oct. 28 local time, blockchain outlet U.Today reported that Moody's Investors Service assigned RLUSD a long-term credit rating of A2 and a short-term credit rating of P-1. P-1 is Moody's highest short-term credit rating, indicating strong confidence in short-term debt repayment capacity and liquidity.

The assessment drew attention because it applied traditional credit-rating standards to a payment token in the digital asset market. Moody's judged RLUSD's redemption operations to have reliability comparable to the level of short-term obligation performance by a stable commercial bank.

The high ratings reflect RLUSD's reserve management system. Ripple aims to overcollateralise reserves to 103 percent to back token issuance. The reserves consist of cash-like U.S. dollar assets and short-term U.S. Treasuries, designed to reduce price fluctuation risk and secure liquidity.

The custody structure was also a key evaluation factor. Bank of New York Mellon (BNY) was designated as the main independent custodian, and cash deposits at third-party commercial banks are capped at $50 million. The cash is hedged through Treasuries held in a segregated BNY account.

Redemption obligations are also institutionalised. Ripple subsidiary Standard Custody & Trust Company must redeem RLUSD at par value into fiat currency within 2 business days when verified institutional clients request it.

Ripple is also accelerating the expansion of its financial infrastructure. On Oct. 26 it received final approval from the U.S. Office of the Comptroller of the Currency (OCC) to establish Ripple National Trust Bank. The entity is expected to take on custody of RLUSD reserves and strengthen the token's storage and management system.

Moody's also flagged remaining risks in RLUSD's legal structure. One reason the long-term rating remained at A2 is that the issuer is not fully legally separated from the bankruptcy risk of its parent, the Ripple Group.

Under this structure, the ultimate holder of RLUSD does not have a direct claim on reserve assets held at BNY. If the issuer halts operations due to a court order or other reasons, the token redemption process could also be affected. It means uncertainty can arise in holders' ability to recover assets if legal separation is insufficient, even with adequate reserves.

As a result, whether RLUSD can improve its credit rating will depend not only on the stability of reserves but also on how much it strengthens its legal protection framework. Even if a trust bank structure is introduced, legal separation between the issuer and the parent is not automatically guaranteed, so specific legal and operating structures are expected to matter.

The assessment shows that in the stablecoin market, the quality of reserves, redemption capacity and the credibility of custodians are becoming important, along with legal mechanisms that protect holders from the issuer's insolvency risk. As RLUSD expands links with regulated finance, whether it addresses legal vulnerabilities remains a key task for boosting confidence.