S&P Global Ratings, the American credit rating agency, has assigned Tether its lowest possible rating, drawing a strong rebuttal from the company behind the world’s most widely used dollar-pegged token.
S&P Issues ‘Weak’ Assessment for USDT
On Wednesday, S&P Global Ratings assigned Tether its lowest stablecoin risk rating: “5 (weak)”. This decision reflects ongoing concerns about reserve transparency and the composition of assets backing USDT.
According to S&P, Tether still provides inconsistent disclosure around its holdings. Moreover, the agency emphasized that a growing share of the reserves now consists of higher-risk assets, such as Bitcoin, gold, corporate bonds, and secured loans. This introduces greater exposure to market and credit volatility.
S&P highlighted that Bitcoin alone accounts for about 5.6% of USDT’s circulating supply, exceeding the company’s 3.9% overcollateralization buffer. Therefore, the agency warned that significant declines in Bitcoin or similar assets could weaken the foundation supporting USDT redemptions.
Beyond asset mix, S&P pointed to credit, market, interest-rate, and currency risks within Tether’s reserve structure. It also noted limited visibility into the quality of custodians and counterparties.
Even so, the agency acknowledged that USDT has consistently maintained strong price stability during recent periods of market stress.
Tether CEO Criticizes Rating Approach
Tether CEO Paolo Ardoino responded quickly to the downgrade, arguing that the rating reflects outdated evaluation methods rather than the realities of digital-asset markets.
He said traditional credit frameworks, designed for banks with long histories and opaque balance sheets, are ill-suited to companies with different structures and faster reporting cycles.
Furthermore, Ardoino pointed out that these same legacy models once supported major financial institutions that later collapsed, suggesting they may not offer a reliable blueprint for assessing crypto issuers.
He described Tether as “overcapitalized” and said traditional finance remains uncomfortable with firms that operate outside what he called a “broken financial system.”
to S&P regarding your Tether rating:
We wear your loathing with pride.
The classical rating models built for legacy financial institutions, historically led private and institutional investors to invest their wealth into companies that despite being attributed investment grade…
— Paolo Ardoino 🤖 (@paoloardoino) November 26, 2025
USDT Issuer Defends Its Reserve Management
Tether expanded on this criticism in its formal response, saying S&P’s assessment misrepresents the company’s performance and resilience. Specifically, it emphasized its ability to navigate banking disruptions, exchange failures, and sharp market swings while maintaining access to redemptions.
The company stated that it has issued about $184 billion in USDT since launch. It also emphasized that it continues to hold sufficient reserves, including U.S. Treasuries and other assets, to support withdrawals at all times.
Earlier this week, the Financial Times reported that Tether has become the largest independent holder of gold, highlighting its rising exposure to alternative reserve assets.
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