Bitcoin News Update: S&P Rating Drop Highlights Tether’s Risky Asset Holdings and Lack of Transparency
- S&P downgrades Tether's USDT to "5 (weak)" due to high-risk reserves and transparency gaps. - Tether's 5.6% BTC exposure exceeds overcollateralization margins, risking undercollateralization if prices drop. - CEO dismisses critique as traditional finance bias, claiming no "toxic" assets in reserves. - Regulators intensify scrutiny as stablecoin centralization risks emerge amid $184B USDT circulation. - S&P urges Tether to reduce risky assets and enhance reserve disclosure to rebuild trust.
S&P Global Lowers Tether’s USDT Rating to Weakest Level
S&P Global Ratings has assigned Tether’s USDT stablecoin its lowest possible rating—“5 (weak)”—on the agency’s 1–5 risk scale for stablecoins. This decision was driven by concerns over Tether’s growing allocation to riskier assets and ongoing issues with transparency. The downgrade highlights increasing regulatory attention on stablecoins, which are intended to maintain a consistent value by being pegged to fiat currencies such as the U.S. dollar.
As the issuer of USDT, Tether now faces mounting scrutiny regarding the makeup of its reserves and its disclosure practices, especially as regulatory expectations continue to evolve.
Concerns Over Reserve Composition
S&P’s downgrade reflects its view that Tether’s reserves now include a larger share of volatile assets like Bitcoin (BTC), gold, corporate bonds, and secured loans. These assets introduce additional credit, market, and liquidity risks. S&P specifically noted that Bitcoin now represents 5.6% of USDT’s backing, which surpasses the 3.9% overcollateralization margin. This means that if Bitcoin’s price were to fall further, Tether’s reserves might not be sufficient to fully cover USDT in circulation, raising the risk of undercollateralization.
Additionally, S&P criticized Tether for providing limited information about its custodians, counterparties, and how its reserves are managed. The agency also pointed out that Tether’s reserves are not separated in a way that would protect users if the company became insolvent.
Tether’s Response to the Downgrade
Paolo Ardoino, Tether’s CEO, responded strongly to S&P’s decision, dismissing the downgrade as evidence of traditional finance’s resistance to disruptive companies. In a statement on X, Ardoino argued that Tether is “the first overcapitalized firm in the financial industry” and insisted that its reserves do not contain any “toxic” assets. He also criticized S&P for using outdated assessment methods designed for banks rather than digital asset companies, emphasizing that Tether operates outside of conventional financial systems.
Ongoing Debate Over Transparency and Risk
This dispute has brought to light the ongoing friction between stablecoin issuers and regulators regarding transparency and risk management. Tether claims that its $184 billion in USDT is fully backed by reserves, including 116 tons of physical gold. However, S&P pointed out that the details of these assets remain unclear. Even with significant holdings in short-term U.S. Treasuries, the lack of detailed information about counterparties and reserve management undermines confidence in USDT’s stability. These concerns have fueled broader questions about the risks of centralization in stablecoins, which depend on trust in the issuer’s financial practices and governance.
Market Context and Future Outlook
The downgrade comes at a time when Bitcoin is experiencing its steepest monthly decline since 2022, contributing to volatility across the cryptocurrency market. Despite this, CoinGecko reports that USDT’s supply increased by $1 billion in November, reaching $184.4 billion. This contrast between market growth and governance concerns underscores USDT’s importance as a liquidity provider in crypto markets, even as its operational model faces greater scrutiny.
As regulators around the world push for clearer rules, the debate over the risks of stablecoin centralization is expected to intensify. S&P has suggested that Tether could improve its rating by reducing its exposure to high-risk assets and providing more detailed disclosures about its reserves and counterparties. For now, the downgrade serves as a reminder to all stablecoin issuers that transparency and robust risk management are essential for maintaining trust in the sector.
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.
You may also like
Silicon Valley's surge in baby technology faces challenges related to affordability, ethical concerns, and unequal access
- Silicon Valley's AI-driven biotech sector is accelerating growth in the U.S. artificial insemination market, projected to expand from $0.76B to $1.41B by 2033. - Financial barriers persist as limited insurance coverage forces patients to pay full treatment costs, hindering market accessibility according to 2025 analysis. - Tech giants like Synopsys and ABVC BioPharma are advancing AI tools and domestic pharmaceutical development to optimize reproductive technologies and supply chains. - Fertility clinics

Transferring Cryptocurrency Assets into Conventional Home Loans: Australia’s Pioneering Unified Solution
- Australia's first crypto-focused mortgage service, Mortgage On Chain, partners with Tax On Chain to provide integrated mortgage and tax advice for digital-asset holders. - The service helps investors secure traditional home loans by managing crypto portfolios and tax obligations without offering crypto-backed lending products. - It addresses gaps in traditional lending criteria for younger crypto investors while aligning mortgage applications with standard banking requirements and tax frameworks. - The c

Opportunities for Revitalizing Post-Industrial Sites: A Strategic Perspective on Webster, NY
- Webster , NY, is transforming a 300-acre brownfield into a high-tech industrial hub via a $9.8M FAST NY grant, boosting advanced manufacturing and logistics. - Projects like the $650M fairlife® dairy facility and Xerox Campus redevelopment highlight strategic focus on job creation and mixed-use development, supported by tax incentives and infrastructure upgrades. - Proximity to Buffalo’s port, 2% industrial vacancy rates, and ESG-aligned remediation efforts position Webster as a logistics and real estate

ICP Price Jumps 30% in a Week: What Factors Are Fueling the Crypto Market’s Latest Spotlight?
- ICP surged 30% in November 2025 driven by technical breakouts, institutional partnerships, and AI innovation like the Caffeine platform. - Strategic collaborations with tech giants and $237B TVL growth signaled growing adoption for enterprise blockchain solutions. - A $4.20-$4.31 price breakout with 261% volume spike highlighted short-term momentum despite lack of major on-chain upgrades. - Long-term viability remains uncertain due to limited adoption metrics and reliance on speculative inflows amid macr
