TLDR
Tether said it strongly disagrees with S&P Global Ratings downgrade of USDT to 5 (weak) and argued the agency misunderstands its reserves and redeemability S&P downgrade report summary.
- Tether said it strongly disagrees and stressed 1:1 redemptions and resilience through crises company response covered by the Financial Times.
- CEO Paolo Ardoino called S&P a propaganda machine for legacy finance and said its models are broken The Defiants coverage.
- Tether highlighted reserves led by U.S. Treasuries and noted large gold holdings, which S&P categorized as higher risk FT analysis of gold positioning.
Deep Dive
1. Disagreement and Redeemability
Tether framed the downgrade as a mischaracterization, saying it strongly disagrees, and pointed to a history of honoring redemptions through banking shocks and market volatility. It emphasized USDTs 1:1 redeemability and said reserves are sufficient to meet withdrawals company response covered by the Financial Times.
S&Ps move shifted USDT from constrained to its lowest stability score, 5 (weak), citing disclosure gaps and a larger share of higher risk assets in reserves S&P downgrade report summary.
Tether rejects the ratings implications for peg stability, but the rating flags areas that outside risk assessors want improved disclosures on.
2. Critique of Rating Methodology
CEO Paolo Ardoino attacked the methodology and incentives of legacy rating agencies, calling S&P a propaganda machine and arguing that traditional models failed investors in past crises and are ill-suited to digitally native money The Defiants coverage.
Other crypto media echoed his stance, noting he framed Tether as challenging a broken traditional system and said the agency does not understand its business model summary report.
The dispute is not only about reserves, but also about who sets the rules for evaluating stablecoins and whether legacy yardsticks fit crypto issuers.
3. Reserves Mix and Risk Debate
S&Ps core concern is composition and disclosure. It said higher risk assets, including bitcoin, gold, corporate bonds, and secured loans, rose to roughly a quarter of reserves, and highlighted bitcoin exposure near mid single digits of reserves as a pressure point if prices fall FT detail on reserve mix and thresholds.
Separately, Tethers gold footprint has surged, with Jefferies estimating it as the largest non?central?bank holder, a strategic choice that S&P still treats as higher risk versus cash and T?bills FT analysis of gold positioning.
The near?term peg often depends on liquidity and redemption operations, but medium?term confidence hinges on disclosures and how much risk lies outside cash and T?bills.
Conclusion
Tether pushed back hard, arguing S&Ps downgrade is based on legacy models and not on its track record of redemptions and resilience. The rating highlights a real debate: how to weigh non?cash assets and disclosure in a stablecoins reserve framework. If you track USDT risk, focus on transparency updates, reserve mix shifts, and redemption speeds rather than headlines alone.
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