S&P downgrades Tether's rating, pointing out that the risk of USDT reserves is rising.

Source: Exame Original Title: S&P downgrades Tether's rating and cites risks in 'digital dollar' reserves Original Link: A major rating agency announced this Wednesday that it has downgraded the credit rating of USDT. USDT is the largest stablecoin in the market. The agency stated that this decision is due to the increasing “risks” surrounding Tether's reserve assets used to back the stablecoin's peg to the US dollar.

The downgrade in rating has resulted in the agency potentially giving the company its worst rating. Tether received a level 5 rating, equivalent to a “weak” classification. Previously, the company's rating was level 4. The assessment also pointed out a “persistent transparency gap.”

The stablecoin rating classification was launched by the rating agency in 2023, covering only cryptocurrencies pegged to the US dollar. For USDT, the agency's main concern is the continual expansion of what are considered high-risk assets in Tether's reserves.

The assessment by the rating agency is that the presence of assets such as Bitcoin, loans, corporate bonds, gold, and other investments increased during the period from 2024 to 2025. All these assets are classified as high risk, which in the view of the rating agency will undermine reserve stability.

Reserves are one of the most important aspects of any stablecoin, as the value of the assets guarantees the peg between the cryptocurrency and the US dollar. For the rating agency, the expansion of risky assets in the reserves will bring instability and open up space for potential peg issues.

Additionally, the company claims that Tether “continues to provide limited information” regarding the custodians of reserve assets, counterparties, and banking account providers used by the company. The rating agency acknowledged the stability of the USDT price but decided to downgrade the rating.

Tether rebutted the statement from the rating agency, stating that it “strongly disagrees” with the assertions made in the agency's report. The company emphasized that it has “handled billions of dollars” in stablecoin redemptions for U.S. dollars, demonstrating “uninterrupted stability.”

The company also stated that USDT has already become a “systemically important financial infrastructure” in emerging countries and has been used as a form of currency, which will support the security around this asset and does not prove that the downgrade by the rating agency is justified.