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Bitcoin News Update: Tether’s S&P Rating Cut Underscores Dangers in Unclear Stablecoin Holdings

Bitcoin News Update: Tether’s S&P Rating Cut Underscores Dangers in Unclear Stablecoin Holdings

Bitget-RWA2025/11/30 20:24
By:Bitget-RWA

- S&P downgrades Tether's USDT to "5 (weak)" due to 5.6% BTC exposure and opaque reserves, risking undercollateralization if BTC drops. - Tether CEO rejects downgrade, claiming S&P's "legacy framework" ignores digital assets' scale, citing $181.2B reserves including $113B in U.S. Treasuries. - Chinese crypto traders react mixed to downgrade, with fears of peg disruption and conspiracy theories about rival stablecoins like USDC . - U.S. GENIUS Act scrutiny highlights Tether's 13% volatile assets and $14B se

S&P Global Lowers Tether's USDT Stability Rating

S&P Global Ratings has reduced the stability rating of Tether's USDT stablecoin to its lowest level, citing growing exposure to high-risk assets and ongoing issues with reserve transparency.

The agency pointed out that Bitcoin now comprises 5.6% of USDT’s reserves, exceeding the previously reported 3.9% overcollateralization buffer. This shift has raised concerns that a sharp decline in Bitcoin’s value could leave USDT undercollateralized. Additionally, S&P highlighted the presence of other volatile assets in Tether’s holdings—such as gold, corporate bonds, and secured loans—whose valuations and credit quality remain unclear.

Tether USDT and S&P Ratings

Tether's Response to the Downgrade

Paolo Ardoino, Tether’s CEO, has firmly rejected S&P’s assessment, arguing that the agency relies on outdated evaluation methods that overlook the scale and economic significance of digital assets. In his statement, Ardoino characterized the downgrade as part of a broader resistance from traditional finance to new innovations. He asserted that Tether is “the first overcapitalized company in the financial sector” and emphasized that its reserves contain no risky assets. Tether also pointed to its regular independent audits and a reserve base of $181.2 billion—including $113 billion in U.S. Treasuries—as evidence of its stability.

Impact on China’s Crypto Market

The downgrade has caused notable anxiety within China’s underground cryptocurrency market, where USDT serves as a vital tool for trading. Despite a nationwide ban on crypto transactions since 2021, over 20 million Chinese users continue to depend on USDT to access digital assets. Reactions on platforms like Weibo and WeChat have been mixed: some traders dismiss the downgrade as typical fear-mongering, while others warn of severe consequences if USDT’s value peg is compromised. There has also been speculation that rival stablecoins, such as USDC, may have influenced S&P’s decision, with some critics viewing these alternatives as more transparent and compliant.

Regulatory Pressures and Reserve Concerns

S&P’s review highlights increasing regulatory attention on stablecoins, especially as the U.S. enacts the GENIUS Act, which mandates that stablecoins be fully backed by short-term government bonds and liquid assets. According to S&P, Tether’s reserves—comprising 13% in volatile assets and 8% in secured loans—do not fully meet these new requirements. Although Tether has previously pledged to eliminate secured loans from its reserves, it has yet to do so; as of September 2025, such assets still total $14 billion.

USDT’s Resilience and Ongoing Scrutiny

This downgrade challenges the durability of USDT, which currently boasts a $184 billion market capitalization and has historically maintained its peg during market turbulence. However, S&P warned that Tether’s limited transparency regarding the creditworthiness of its custodians and the lack of clear asset segregation could heighten risks in times of crisis. Despite these concerns, USDT remains a cornerstone of the global crypto ecosystem, especially in regions with restricted access to U.S. dollars, even as calls for tighter regulation continue to grow.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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