S&P Downgrades USDT; Tether CEO Criticises Methodology
Tether CEO Fires Back Following Low S&P Rating
Tether’s CEO Paolo Ardoino has publicly rejected S&P Global’s latest assessment of the USDT stablecoin, after the agency assigned a “5 (weak)” rating in its Stablecoin Stability Assessment. The downgrade — the lowest tier in S&P’s classification — has triggered a forceful response from the world’s largest stablecoin issuer, sparking renewed debate around reserve transparency, risk exposure, and the evolving standards used to evaluate digital-asset stability.
S&P Flags Rising Exposure to Higher-Risk Assets
In its analysis, S&P noted that a growing portion of USDT’s reserves is now held in what it considers higher-risk categories, including bitcoin, gold, secured loans, and corporate exposures. These assets are estimated to represent nearly a quarter of the total reserve base — a meaningful increase compared with previous years.
One of the primary concerns relates to bitcoin holdings, which have expanded to a level S&P believes could challenge USDT’s ability to maintain its peg during sustained market turbulence. The agency also highlighted gaps in reserve disclosure, custody arrangements, and counterparty transparency as contributing factors to the downgrade.
S&P argued that these elements reduce clarity over USDT’s liquidity profile and its ability to absorb large-scale redemption shocks under severe market stress.
Tether’s Response: A Defiant Rebuttal
Paolo Ardoino sharply criticised the assessment, calling it outdated, narrow in scope, and unreflective of the operational realities of crypto-native financial infrastructure. He argued that Tether maintains a strong liquidity position and continues to publish attestation reports demonstrating full reserve coverage.
Ardoino stated that S&P’s methodology undervalues real-time on-chain transparency, misinterprets the role of over-collateralisation within the crypto ecosystem, and fails to recognise that USDT has historically maintained its peg through multiple periods of market stress.
His statement reinforced the company’s view that traditional rating frameworks are not yet calibrated to assess the unique dynamics of digital-asset markets.
Market and Industry Reaction
The downgrade has divided market observers. Some see it as a timely reminder of the importance of conservative reserves, especially as stablecoins become increasingly embedded in both retail trading and institutional settlement flows. Others argue the assessment places undue weight on traditional financial benchmarks, overlooking structural advantages of blockchain-native liquidity.
Despite the rating action, USDT has continued to maintain its peg, with trading volumes and liquidity remaining largely stable. This resilience has further fuelled debate over whether conventional rating models are adequate for evaluating stablecoins that operate with real-time issuance, redemption, and on-chain monitoring.
A Pivotal Moment for Stablecoin Regulation
The episode arrives at a time when global regulators are tightening expectations around reserve quality, transparency, and auditability for stablecoin issuers. Tether’s position — emphasising autonomy, over-collateralisation, and operational resilience — suggests it is preparing for heightened regulatory scrutiny while defending its existing reserve strategy.
The dispute also underscores a broader tension between established financial institutions and emerging crypto infrastructures. As stablecoins expand their role in payments, settlement, and liquidity networks, assessment methodologies are likely to evolve, bringing new standards for transparency and risk measurement.
Conclusion
S&P’s downgrade of USDT marks a significant moment for the world’s largest stablecoin, raising questions about risk exposure and reserve structure. Tether’s assertive response highlights its confidence in the strength of its balance sheet and its belief that traditional assessment frameworks have yet to adapt to the nature of decentralised financial systems.
The coming months will offer a clearer view of whether institutional perceptions shift, whether regulatory expectations intensify, and how Tether positions itself amid a rapidly maturing global stablecoin ecosystem.
