S&P's Tether Downgrade Revives 'De-pegging' Risk Warning, HSBC Says

Source: CryptoNewsNet Original Title: S&P’s Tether Downgrade Revives ‘De-pegging’ Risk Warning, HSBC Says Original Link: Investment bank HSBC said S&P Global Ratings’ decision to cut Tether’s reserve assessment to weak is a reminder that stablecoins carry an embedded “de-pegging” risk that doesn’t apply in the same way to other forms of tokenized money.

The core issue is straightforward: if holders rush to redeem, a stablecoin issuer needs reserves that are unquestionably liquid and low-risk, or the token’s price can wobble away from its intended peg, analysts Daragh Maher and Nishu Singla said in the Monday report.

Stablecoins are cryptocurrencies pegged to assets like fiat currencies or gold. They underpin much of the crypto economy, serving as payment rails and a tool for moving money across borders. Tether’s USDT is the largest stablecoin, followed by Circle’s USDC.