S&P Slashes Tether USDT Stability Rating Amid Reserve Fears
2 Stablecoins S&P Global Ratings downgraded Tether's USDT to its weakest stability level, citing increased exposure to volatile assets, insufficient reserve transparency, and concerns about the stablecoin's ability to maintain its dollar peg.
S&P Global Ratings has downgraded Tether's USDT stablecoin to its lowest stability tier, citing increased exposure to volatile assets such as Bitcoin, gold, secured loans, and corporate bonds. The agency warned that Bitcoin now makes up about 5.6% of USDT's reserves, exceeding the overcollateralization buffer and raising the risk of undercollateralization if Bitcoin's value drops. S&P also highlighted persistent gaps in transparency, including insufficient disclosure about reserve composition, custodians, and counterparties, as well as the lack of regulatory safeguards and asset segregation. The proportion of high-risk assets in Tether's reserves has risen from 17% to 24% over the past year. While Tether claims to maintain sufficient backing and has not lost its peg, S&P's downgrade reflects concerns about the stablecoin's ability to withstand market shocks and maintain its dollar peg. The agency noted that the rating could improve if Tether reduces its exposure to high-risk assets and enhances transparency regarding its reserves and partners.
