On the latest episode of “The Future Is On” podcast, S&P Global Ratings’ Chief DeFi Officer, Chuck Mounts, and Chainlink Labs’ Global Head of Banking and Capital Markets Sales, Frank Seibold, joined Global Custodian’s Jon Watkins to discuss how institutional-grade risk infrastructure for DeFi and onchain finance will transform the future of global markets.
Last month, the S&P 500 went onchain through perpetual contracts on Hyperliquid’s high-performance blockchain. In October, S&P Global Ratings and Chainlink collaborated to bring S&P Global Ratings’ Stablecoin Stability Assessments (SSAs) onchain via Chainlink’s institutional-grade data publishing service, DataLink.
“What we are striving to do is make sure that we are bringing our data analytics and benchmarks to the marketplace in onchain markets similar to or even better than what we do in offchain markets,” Mounts explained.
The goal is to enhance market functioning, provide transparency, enable better decision-making, and facilitate market liquidity and price discovery.
“From our starting point, we look at the transitional markets from being fully offchain in the past to a future that we believe will be fully onchain.”
“It’s all about the infrastructure and the standardization of messages and connecting things,” said Seibold.
“We need to rebuild these solid rails and these connectivity layers so that the trust that exists in TradFi can reemerge from DeFi.”
He explained the mission is not to add infrastructure on top of markets, but to allow markets to emerge from the infrastructure.
“That is why I’m with Chainlink, because that puts us right in the middle of that infrastructure layer that’s so essential. We do orchestration, we do interoperability, we solve for compliance concerns, we solve for the data oracle problem. We are fueling that together, with partners like S&P, to bring the TradFi experience onchain, to recreate the trust that exists in TradFi.”
DataLink leverages Chainlink’s hyper-reliable oracle infrastructure, which secures nearly $100 billion throughout DeFi and has facilitated over $29 trillion in transaction value, as a turnkey service for data owners like S&P Global Ratings to seamlessly, securely, and reliably publish data onchain without the need to build or maintain new infrastructure.
Bringing S&P Global Ratings’ SSAs onchain via DataLink empowers more than 2,400 financial institutions, protocols, and developers in Chainlink’s ecosystem to integrate stablecoins into innovative DeFi products with enhanced risk management.
Since the GENIUS Act was signed into law last year, stablecoins are gaining prominence as a core financial primitive. J.P. Morgan Global Research projects the stablecoin market, which currently exceeds $300 billion, could reach $750 billion in the next few years.
S&P Global’s SSAs evaluate a stablecoin’s ability to maintain a 1:1 value peg with a fiat currency.
“We saw that there was a need across all of our stakeholders, both traditional stakeholders and new types of stakeholders, to understand what was inherent in the risks of stablecoins,” Mounts explained.
He described S&P’s credit rating and non-rating risk assessment as two sides of the same coin helping inform market participants about the inherent risks of onchain assets like stablescoins while improving liquidity and price discovery.
“The idea still is that I need to look at someone like the S&P to give me a neutral view on how to look at this from a risk perspective,” Seibold agreed.
He outlined how Chainlink’s Automated Compliance Engine (ACE) – a unified standard for creating compliance-focused digital assets and services across public and private blockchains – allows institutions to input SSAs before initiating stablecoin transactions.
“We consider the SSAs as a significant and very important input into that engine,” he said. “Instead of asking people to trust a protocol, we give them a trusted way of evaluating risk.”
Looking toward the next 12 to 18 months, Mounts expects increasing regulatory clarity in the U.S. will drive an “extreme ramp-up” in real-world assets coming onchain.
Seibold shared a similar vision.
“My view of the world is that institutional DeFi will become 100% more integrated and less theoretical,” he said.
“It will create ecosystems. It will create gravitational pull and it’s happening. I can see it. I can smell it. It’s there.”
Watch the full episode.