Crypto’s Most Trusted Stablecoin Given Lowest Potential ‘Weak’ Ranking By Main TradFi Company

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

S&P initially rolled out its stablecoin ranking framework in 2023 to gauge dangers like liquidity, governance, and asset backing within the rising sector. In line with their latest report on USDT, Tether’s reserves have shifted towards extra risky holdings over the previous yr. These perceived riskier property, corresponding 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 specifically as a reserve asset, now comprising 5.6% of the backing, which is nicely above the three.9% reserve buffer Tether itself flagged in its newest quarterly report (PDF). In line with 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 property, 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 via lots of crypto’s wild rides over time, notably dealing with billions in redemptions with out a hitch throughout the collapse of crypto exchange FTX.

A Tether spokesperson advised Reuters the corporate “strongly disagrees” with S&P’s evaluation, which makes use of an outdated mannequin that ignores USDT’s monitor file and function as very important infrastructure in rising markets.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 pleasure,” thriving as an “overcapitalized” outsider to a flawed legacy system. “The classical ranking fashions constructed for legacy monetary establishments, traditionally led personal and institutional traders to speculate their wealth into firms 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 submit, Ardoino referenced S&P’s failures throughout the 2008 monetary disaster, which have been portrayed by a blind lady within the related movie The Massive 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, nearly 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 destructive money stream and bitcoin focus as crimson flags, very similar to 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, corresponding 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 must also be famous that S&P is essentially centered on stablecoin issuers’ potential 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 personal foreign money doesn’t essentially match the mildew completely. In different phrases, USDT could also be considered negatively by many within the conventional monetary system as a result of it’s working on a brand new normal constructed on bitcoin fairly than the normal, dollar-based system.