S&P downgrades Tether’s USDT peg stability to lowest rating
S&P Global Ratings has lowered Tether’s USDt (USDT) to the minimum score on its stablecoin stability scale, citing risks to the token’s capacity to uphold its U.S. dollar peg.
S&P said the “weak” assessment reflects the composition of reserves that include higher-volatility assets such as Bitcoin (BTC), gold, loans, and corporate bonds. The agency noted that Bitcoin accounts for 5.6% of USDT in circulation, exceeding the 3.9% overcollateralization margin tied to a 103.9% collateralization ratio, and warned that declines in the value of these higher-risk assets could diminish collateral coverage.
The agency added that Tether is headquartered in El Salvador and regulated by the National Commission of Digital Assets (CNAD), which it characterized as having more flexible requirements for stablecoin reserve assets.
S&P also pointed to the absence of comprehensive audits or proof-of-reserves as a key factor behind the rating. It said, however, that approximately 75% of USDT’s reserves are in U.S. Treasurys and other short-dated instruments considered lower risk.
In a statement, Tether described the report as misleading and said it strongly disagreed with the conclusions. The company said the assessment fails to reflect the nature, scale, and macroeconomic role of digitally native money and overlooks data demonstrating USDT’s resilience, transparency, and global utility.
Tether CEO Paolo Ardoino criticized the usefulness of traditional ratings frameworks, saying that historic models designed for legacy finance led investors toward companies that held investment-grade ratings before later collapsing.
The rating was issued during a period of heightened policy focus on stablecoins, following the passage of regulations in the United States, efforts by the administration of U.S. President Donald Trump to prioritize stablecoins as a means of supporting U.S. dollar dominance, and a stablecoin market capitalization surpassing $300 billion.
Tether’s activity draws central bank comparisons as gold holdings increase
According to Ardoino, Tether ranks as the 17th largest holder of U.S. Treasurys globally, with more than $112 billion in short-term U.S. government securities, exceeding the holdings of several countries, including South Korea, Saudi Arabia, and Germany.
The company has also accumulated 116 tons of gold in reserves. The combination of U.S. government securities, gold holdings, and the ability to issue and redeem digital dollars has prompted some analysts to compare Tether’s operations to those of a central bank.
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