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
Uruguay’s Energy Challenges Disrupt Tether’s $500 Million Cryptocurrency Investment
- Tether abruptly ended its $500M Uruguay Bitcoin mining project due to unsustainable energy costs and uncompetitive tariffs. - The project, initially promoted as eco-friendly, faced $4.8M in unpaid bills and regulatory challenges. - The exit highlights risks for crypto miners in regions with volatile energy markets and uncertain policies. - Tether remains interested in Latin American green energy projects despite the Uruguay setback.

Solana News Update: Solana Experiences Sharp Price Drop, Yet Institutional Investments Reflect Confidence in Its Future
- A $239M whale transfer on Solana by Forward Industries to Fireblocks Custody highlights institutional confidence amid SOL's 53% price drop since January 2025. - Upexi's $23M private placement and 40% stock decline underscore crypto exposure risks as institutional Solana ETF inflows hit $420M in November. - CME's Dec 15 SOL/XRP futures launch and Fidelity's staking ETFs signal growing institutional adoption despite Solana's $77.4B market cap decline. - Whale activity and ETF trends suggest strategic long-

Bitcoin Updates Today: U.S. Bitcoin Holdings: Advancement or Threat in the International Crypto Competition?
- U.S. Rep. Warren Davidson proposes Bitcoin tax payments and a Strategic Bitcoin Reserve to modernize tax collection and hedge against inflation. - The UK tightens crypto tax rules, aligning with global efforts to regulate digital assets amid volatility, fraud, and tax evasion concerns. - Critics warn BTC's volatility risks reserve stability, while compliance costs and environmental impacts challenge adoption despite potential $230B reserve growth by 2030. - The bill mandates KYC data for transactions and
Harley-Davidson's 33 consecutive years of dividends demonstrate strong trust from investors
- Harley-Davidson declared a $0.18/share Q4 2025 dividend, extending its 33-year uninterrupted payout streak and signaling strong investor confidence in its financial stability. - Q3 2025 results showed EPS of $3.10 (double estimates) and $1.34B revenue (surpassing $1.01B forecasts), alongside strategic debt repurchases to optimize capital structure. - UPS grounded MD-11 fleets post-crash, delaying holiday operations, while CarMax and James Hardie faced lawsuits and stock declines amid leadership changes a
