The international rating agency S&P Global Ratings has downgraded the stability rating of the stablecoin USDT to the lowest level on its scale. The agency’s experts have questioned the token’s ability to maintain its peg to the US dollar, noting the structure of its reserves.
This is reported by Business • Media
Reasons for the Downgrade of USDT
The S&P report states that the collateral model for USDT includes assets with heightened volatility, such as Bitcoin, gold, corporate bonds, and loans. According to the agency’s calculations, Bitcoin accounts for 5.6% of the total USDT in circulation, while the overall collateral ratio stands at 103.9%. Experts emphasize that a decline in the value of risky assets could lead to a decrease in the collateral level of the stablecoin.
Additional factors influencing S&P’s decision include the lack of regular audits of reserves and the regulatory environment for Tether in El Salvador, where oversight is conducted by the National Commission for Digital Assets with softer requirements for reserve assets. Additionally, about 75% of USDT reserves are held in US Treasury bonds and other low-risk short-term financial instruments.
Tether’s Response and Market Situation
Tether has sharply criticized the S&P report, calling its conclusions “misleading.” Representatives of the issuer believe that the agency’s analysts inaccurately characterized the stability of the stablecoin, and that the document does not reflect the actual state of affairs. The company’s CEO, Paolo Ardoino, emphasized that traditional rating models have often supported financial institutions that ultimately collapsed, and he highlighted Tether’s independence from traditional financial systems.
“The propaganda machine is increasingly worried when any company tries to challenge the gravitational pull of a broken financial system. No company should dare to separate itself from it,” said the head of Tether.
The S&P report was released against the backdrop of a rapid increase in the stablecoin market following the passage of the Genius Act in the US. The total capitalization of the sector has exceeded $300 billion, and Tether itself ranks 17th among the largest holders of US government treasury securities, owning over $112 billion in short-term bonds.
Analysts also pointed out the growth of Tether’s gold reserves — the company has accumulated 116 tons of the metal, equivalent to the reserves of Hungary or South Korea. The combination of a large portfolio of government bonds and the ability to quickly issue or redeem USDT has led to discussions about whether Tether is effectively performing functions similar to those of a central bank.
It was previously reported that Tether has entered the Bitcoin-backed loan market by investing in the company Ledn.