Tether Faces Downgrade By S&P Global Amid Concerns Over Disclosure And Assets Holdings

Overview

Tether, the issuer of the largest stablecoin by market capitalization, has been downgraded by S&P Global. This downgrade is attributed to concerns regarding Tether’s disclosure practices and its increasing allocation to high-risk assets.

Details of the Downgrade

On Wednesday, S&P Global announced a downgrade of Tether’s rating, citing “persistent gaps in disclosure” and a growing investment in “high-risk assets” within Tether’s reserves. The agency highlighted various assets, including Bitcoin, gold, corporate bonds, secured loans, and other investments, which carry inherent risks such as credit, market, interest rate, and foreign exchange vulnerabilities.

S&P Global’s new assessment scale, introduced in 2023, ranges from 1 to 5 and evaluates the risk associated with different stablecoins. Tether’s USDT stablecoin received a rating of “5 (weak),” the lowest score possible, down from a previous rating of “4 (constrained).” The agency expressed concerns over the limited insight Tether provides into the creditworthiness of its custodians and counterparties.

Tether’s Response

In response to the downgrade, Tether’s CEO, Paolo Ardoino, took to social media to express his views. He stated that traditional credit rating methods, like those used by S&P, are based on a flawed system and argued that Tether is “overcapitalized” and does not hold “toxic reserves.” Ardoino suggested that S&P’s rating criteria are more appropriate for conventional financial institutions rather than digital asset issuers, indicating a belief that the downgrade reflects discomfort within traditional finance towards innovative financial entities.

Ardoino emphasized that Tether has proven its resilience through various financial crises, including banking collapses and extreme market fluctuations, while maintaining full stability and the ability to redeem USDT. He also noted that Tether has issued approximately $184 billion worth of USDT and holds sufficient reserves, including US Treasuries, to meet redemption demands.

Tether’s Gold Holdings

Following the downgrade, Tether rejected S&P’s characterizations and highlighted its status as the largest independent holder of gold globally. Reports indicate that Tether purchased more gold in the last quarter than any central bank, acquiring 26 tons and increasing its total gold reserves to nearly 120 tons. This shift towards non-traditional reserve assets marks a significant aspect of Tether’s strategy.

Impact on the crypto market

• Tether’s downgrade may influence investor confidence in stablecoins and their associated risks.
• The response from Tether’s CEO highlights ongoing tensions between traditional finance and digital asset issuers.
• The increase in Tether’s gold holdings could signal a trend among stablecoin issuers to diversify their reserves.
• The downgrade may lead to increased scrutiny of other stablecoins and their asset management practices.
• Overall market sentiment towards Tether could shift, affecting USDT’s usage and adoption in the broader crypto ecosystem.

Updated: 11/27/2025, 1:48:49 AM