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Tether Pushes Back After S&P Highlights Risks in Stablecoin Reserves
Tether, the issuer behind the world’s most widely used dollar-pegged stablecoin USDT, is firing back after S&P Global Ratings assigned the token its lowest possible stablecoin risk rating: “5 (weak).” The decision has reignited debate around transparency, reserve quality, and whether traditional credit frameworks are equipped to assess digital-asset firms.
S&P Flags Reserve Transparency and Riskier Assets
In its assessment, S&P highlighted persistent concerns about inconsistent disclosures surrounding Tether’s holdings. The agency also pointed to a rising proportion of higher-risk assets—including Bitcoin, gold, corporate bonds, and secured loans—within USDT’s reserves.
According to S&P, Bitcoin alone now represents roughly 5.6% of USDT’s circulating supply, surpassing Tether’s 3.9% overcollateralization buffer. The agency warned that a sharp downturn in BTC or similar assets could pressure the company’s ability to honor redemptions.
Beyond asset composition, S&P cited exposure to credit, market, interest-rate, and currency risks, as well as limited insight into Tether’s custodians and counterparties. Still, the firm acknowledged that USDT has maintained strong price stability even during recent market turbulence.
Tether CEO Calls Rating ‘Outdated’ and Misguided
Tether CEO Paolo Ardoino swiftly criticized the downgrade, arguing that S&P’s methodology relies on outdated models built for traditional banks—institutions he noted have suffered spectacular failures despite receiving favorable ratings.
Ardoino described Tether as “overcapitalized”, suggesting that legacy financial players remain uneasy with companies operating outside what he called a “broken financial system.”
Tether Defends Its Reserves Amid Growing Scrutiny
In a formal statement, Tether said S&P’s assessment misrepresents its track record, stressing its ability to withstand banking outages, exchange collapses, and extreme market volatility without disrupting redemptions. The company noted it has issued $184 billion in USDT since inception and continues to hold sufficient reserves—including U.S. Treasuries—to support withdrawals.
Earlier this week, the Financial Times reported that Tether had become the largest independent holder of gold, underscoring its growing exposure to alternative reserve assets.
