Crypto’s Most Trusted Stablecoin Given Lowest Doable ‘Weak’ Score By Main TradFi Company

Tether’s USDT, the dominant dollar-pegged stablecoin with practically $185 billion in circulation, simply took successful from conventional finance score powerhouse S&P World, because it downgraded its evaluation of USDT’s skill to take care of its peg from 4 to five, which is the weakest rating on its related scale.

S&P initially rolled out its stablecoin score framework in 2023 to gauge dangers like liquidity, governance, and asset backing within the rising sector. In response to their latest report on USDT, Tether’s reserves have shifted towards extra risky holdings over the previous 12 months. These perceived riskier belongings, similar to bitcoin, gold, secured loans, and company bonds, now make up 24% of the reserve combine, up from 17% in 2024.

Certainly one of S&P’s sharpest criticisms in its downgrade of USDT lies in its rising reliance on bitcoin particularly as a reserve asset, now comprising 5.6% of the backing, which is effectively above the three.9% reserve buffer Tether itself flagged in its newest quarterly report (PDF). In response to S&P, this publicity amplifies dangers tied to bitcoin’s infamous volatility.

S&P additionally sees severe points relating to transparency at Tether, because the stablecoin issuer’s attestations provide little greater than high-level snapshots, with zero granularity on who holds these belongings, how they’re custodied, or what counterparties lurk within the shadows.

That mentioned, Tether’s reserves nonetheless lean closely on short-term U.S. Treasuries and money equivalents, accounting for 75% of the reserves. Regardless of the alleged crimson flags from S&P, USDT has held its $1 peg by means of lots of crypto’s wild rides through the years, notably dealing with billions in redemptions with no hitch through the collapse of crypto exchange FTX.

A Tether spokesperson informed Reuters the corporate “strongly disagrees” with S&P’s evaluation, which makes use of an outdated mannequin that ignores USDT’s observe file and function as important infrastructure in rising markets.

Tether CEO Paolo Ardoino went further on X, framing the downgrade as a badge of honor: Tether “wears S&P’s loathing with delight,” thriving as an “overcapitalized” outsider to a flawed legacy system. “The classical score fashions constructed for legacy monetary establishments, traditionally led non-public and institutional traders to speculate their wealth into corporations that regardless of being attributed funding grade scores collapsed,” Ardoino added.

In another post, Ardoino pointed to Tether’s newest attestation announcement, the place the corporate additionally claimed an extra reserve buffer approaching $30 billion; nonetheless, this isn’t explicitly a part of USDT’s present reserves.

In one other publish, Ardoino referenced S&P’s failures through the 2008 monetary disaster, which have been portrayed by a blind girl within the related movie The Huge Brief. S&P paid a $1.375 billion settlement in a associated case with the U.S. Division of Justice relating to allegations that the scores company had defrauded traders with its scores of monetary merchandise within the lead as much as the housing disaster. Notably, Bitcoin itself was initially launched in January 2009, virtually as a direct response to the collapse of belief concerned within the monetary disaster.

S&P be likehttps://t.co/gGBOPhrVFX

— Paolo Ardoino 🤖 (@paoloardoino) November 27, 2025

Simply weeks earlier than scrutinizing Tether, S&P also slapped a speculative ‘B-‘ issuer credit rating on bitcoin treasury company Strategy, highlighting the agency’s $80 billion-plus bitcoin hoard as a vulnerability that might cripple debt funds amid market plunges. The company’s outlook stays secure for now, however it flags Technique’s detrimental money circulate and bitcoin focus as crimson flags, very like the volatility dangers baked into USDT’s reserves.

Whereas S&P sees points with Tether and Technique utilizing bitcoin as a reserve asset, many different well-known establishments, similar to the Harvard University Endowment and the state of Texas, are shopping for the crypto asset to carry for the long run and discover it to be helpful as an apolitical, digital retailer of worth.

It also needs to be famous that S&P is basically targeted on stablecoin issuers’ skill to redeem tokens for {dollars} of their assessments, so an asset like USDT the place the issuer is working extra like a financial institution issuing its personal non-public forex doesn’t essentially match the mould completely. In different phrases, USDT could also be seen negatively by many within the conventional monetary system as a result of it’s working on a brand new commonplace constructed on bitcoin somewhat than the standard, dollar-based system.