S&P International Scores has downgraded Tether’s flagship stablecoin USDT to the weakest potential rating on its stablecoin stability scale, citing elevated publicity to dangerous property like bitcoin BTC$88,308.01 and ongoing gaps in reserve disclosure.
In line with the revised evaluation revealed on Wednesday, the scores company lowered USDT’s rating in its potential to take care of value peg to the U.S. greenback to five (weak) from the earlier 4 (constrained), which had been assigned in December 2023.
Tether pushed again in opposition to S&P’s evaluation in a press release shared with CoinDesk.
“Tether strongly disagrees with the characterization offered within the report, which applies a legacy framework that fails to seize the character, scale, and macroeconomic significance of digitally native cash and overlooks knowledge that clearly show USDT’s resilience, transparency, and international utility,” the assertion mentioned.
Turning again to S&P, the report famous that BTC now accounts for about 5.6% of USDT’s backing — greater than its 3.9% overcollateralization margin — elevating issues {that a} sharp value drop may go away the token undercollateralized.
The agency’s stablecoin reserves additionally embrace gold, company bonds, secured loans and different investments with various levels of credit score and market danger, S&P added. The company pointed to oft-cited issues a couple of lack of detailed public reporting on the valuation of those property and the creditworthiness of the banks and custodians holding them.
“A drop within the bitcoin’s worth mixed with a decline in worth of different high-risk property may due to this fact cut back protection by reserves and result in USDT being undercollateralized,” the report mentioned.
Tether’s USDT is the most important stablecoin in circulation, with a market cap exceeding $180 billion. It performs a central position in international crypto markets, particularly in rising economies the place entry to U.S. {dollars} will be restricted. For years, issues over the soundness and backing of USDT, sometimes called “Tether FUD,” have sparked debate among the many crypto observers and regulators. Regardless of that, USDT’s value has maintained its value peg, a degree that even S&P acknowledged within the report.
USDT is backed by a mixture of property, with U.S. Treasuries and cash-like property making up 77% of the reserves, in accordance with Tether’s latest disclosures. Tether beforehand mentioned that it deliberate to part out secured loans from the reserve by the top of 2023. Nevertheless, these property nonetheless made up 8%, valued at over $14 billion, of the backing property as of September 2025, in accordance with the newest attestation signed by BDO Italy.
In line with the U.S. stablecoin legislation enacted this 12 months, also referred to as the GENIUS Act, issuers are required to again tokens 1:1 by short-term U.S. authorities bonds and liquid property like cash market funds and repo agreements.
Learn extra: ECB Doubles Down on Warning That Stablecoins Might Pose International Monetary Dangers
