Community Trust ScoreVerified
A fresh dispute has emerged between Tether and one of the world’s largest credit rating institutions after S&P Global Ratings assigned USDT its weakest possible stablecoin score. The rating has triggered concern in parts of the digital-asset community, but Tether’s leadership is forcefully rejecting the assessment, calling it both outdated and irrelevant to the realities of today’s crypto-market structure.
S&P Gives USDT a “Weak” Risk Score
On Wednesday, S&P Global Ratings issued its first detailed evaluation of the world’s largest stablecoin and concluded that USDT deserves its lowest rating: “5 (weak)”. The rating agency cited multiple risk factors tied to reserve transparency and the composition of assets backing the token.
According to S&P, the company’s reserve disclosures remain inconsistent, and the breakdown of assets introduces significant exposure to market volatility. The credit agency specifically pointed to Bitcoin, gold, corporate bonds, and secured loans as risk-heavy holdings within Tether’s reserve portfolio.
One of the most notable figures highlighted in the report is Bitcoin’s growing share in USDT reserves. S&P estimates that Bitcoin now represents roughly 5.6% of the tokens in circulation — a level that exceeds Tether’s previously reported 3.9% collateral buffer. The implication is that the value of USDT could become increasingly tied to fluctuations in cryptocurrency markets.
S&P also cited credit, interest-rate, and currency risks, as well as limited visibility into how custodians and counterparties involved in Tether’s reserve management are evaluated.
Despite the critical rating, the agency acknowledged USDT’s stability in practice, noting that the token has retained its dollar peg reliably during recent periods of extreme market turbulence.
CEO Paolo Ardoino Responds: “Traditional Finance Doesn’t Get It”
Tether CEO Paolo Ardoino was quick to challenge S&P’s methodology, stating that the evaluation relies on outdated financial models built for a banking system that operates very differently than blockchain companies.
According to Ardoino, credit-rating frameworks were designed to assess institutions with slow reporting cycles and opaque balance sheets — the opposite of the transparency that blockchain technology can offer. He argued that the agency’s perspective fails to account for the speed, structure, and redeemability requirements of stablecoins.
Ardoino also noted that the same traditional financial models once assigned strong ratings to major banks that later collapsed, implying that such risk frameworks are not inherently reliable for measuring digital-asset stability.
In his words, Tether is “overcapitalized” and operates outside the boundaries of what he described as a “broken financial system.” He suggested that discomfort from legacy finance may be shaping how USDT is viewed by traditional analysts.
Tether Defends Its Reserve Strategy
In its official statement, Tether expanded on the CEO’s comments and said S&P’s rating fails to reflect the company’s stability record. The company emphasized that USDT has remained redeemable and fully backed during banking failures, exchange shutdowns, and market corrections — events that historically broke other financial systems.
According to Tether, the company has issued about $184 billion worth of USDT since inception and has consistently maintained reserves sufficient for redemptions. The company reiterated that U.S. Treasuries still make up a large share of its backing, complementing alternative assets such as Bitcoin and gold.
Earlier this week, reporting from the Financial Times revealed that Tether has become the world’s largest independent holder of gold. Supporters argue that this diversification protects USDT against government-related banking shocks and counterparty restrictions. Critics counter that volatility in alternative assets could influence redemption confidence when markets fall.
Does the Rating Change Tether’s Market Standing?
Even with the S&P downgrade, USDT remains the most widely used dollar-pegged asset in the world. It dominates global stablecoin trading pairs and continues to play a foundational role in crypto markets, especially in regions where access to traditional banking is limited.
In practice, Tether’s peg has not shown meaningful instability despite periods of aggressive redemptions and regulatory scrutiny. That history complicates the impact of S&P’s assessment. Some investors may treat the downgrade as a conservative risk signal, while others may view it as another case of legacy institutions misunderstanding the nature of digital assets.
What makes the situation particularly important for markets is that this is the first time a major U.S. credit-rating firm has issued a formal rating for USDT. Future updates — positive or negative — could influence institutional adoption, custody decisions, and regulatory attitudes toward stablecoins.
The Larger Debate: Transparency or System Mismatch?
The disagreement between S&P and Tether reflects a larger tension between the traditional financial sector and the crypto economy. The stablecoin market is expanding quickly, and regulators are increasingly concerned about the reserve structures behind tokens that represent billions in daily trading volume.
Tether, meanwhile, argues that the crypto world cannot be evaluated solely through the lens of traditional finance — especially when decentralized markets function without central banks or government protections.
Whether S&P adjusts its model or Tether adjusts its reserve structure remains to be seen. For now, the stablecoin issuer remains firm in its view that market usage and redeemability speak louder than legacy metrics.
What is clear is that USDT continues to sit at the center of the crypto-trading ecosystem — and that any development around its perceived risk profile will capture global attention.
