Tether Rebukes S&P After USDT Stability Score Falls to Lowest Tier

S&P cut USDT’s stability score to 5 — the weakest level on its scale — citing rising exposure to higher-risk reserve assets and alleged gaps in Tether’s disclosures, according to the agency’s latest analysis. Its report notes that bitcoin (BTC) now represents a greater allocation of USDT reserves, concluding that a steep drop in bitcoin’s spot value could leave the stablecoin undercollateralized.

Tether, on the other hand, responded publicly, sharply disputing both the methodology and conclusions. The company said S&P applied a legacy financial model that “fails to capture the nature, scale, and macroeconomic importance of digitally native money,” adding that the analysis overlooks USDT’s operational history, its real-time reserve reporting, and its expanding presence in global commerce.

Skepticism from legacy rating agencies is a “badge of honor,” CEO Paolo Ardoino said, emphasizing the company’s long-standing position that traditional credit frameworks remain poorly suited for evaluating digital-asset infrastructure.

“The classical rating models built for legacy financial institutions, historically led private and institutional investors to invest their wealth into companies that despite being attributed investment grade ratings collapsed pushing worldwide regulators to challenge such models, the independence and objective assessment of all major rating agencies,” Ardoino posted to X.

He added:

“The traditional finance propaganda machine is growing worried when any company tries to defy the force of gravity of the broken financial system. No company should dare to decouple itself from it.”

In its rebuttal, Tether argued that S&P’s focus on an increased share of “risk assets” misrepresented the broader picture. While the report flagged a rise from 17% to 24% year-over-year, Tether noted total reserves expanded from $143.7 billion in 2024 to $181.2 billion in 2025, meaning the company holds more high-quality reserves in absolute terms than at any time in its history.

The response also stressed that Tether is fully compliant with regulatory frameworks in El Salvador and France, in addition to registration under the U.S. Financial Crimes Enforcement Network. The company further highlighted that USDT’s growth contradicts several assumptions underlying S&P’s analysis.

According to Tether, usage metrics continue to climb across exchanges, decentralized finance (DeFi) protocols, payment corridors and cross-border commerce — indicators the firm says are inconsistent with the liquidity and redemption risks implied in the rating. S&P’s own report acknowledged that, despite concerns, USDT has consistently maintained its peg and honored redemptions.

Tether also framed USDT as systemically important infrastructure rather than a speculative trading token. The company’s statement, shared with Bitcoin.com News, said the stablecoin supports remittances, payrolls, and commercial payments across emerging markets from Türkiye to Nigeria and Argentina, where dollar access is often constrained. It added that USDT’s real-world use case differentiates its risk profile from the assumptions embedded in traditional ratings models.

Read more: Tether Moves Into Bitcoin-Backed Lending With Strategic Ledn Stake

Another key point in Tether’s response is the scale of its U.S. Treasury exposure. The company noted that with about $135 billion in direct and indirect holdings, it ranks as one of the largest Treasury holders globally — roughly the 17th-largest in the world, according to its latest attestation. Tether said this position is inconsistent with S&P’s portrayal of the company as vulnerable to liquidity stress.

Financial performance was also central to Tether’s pushback. The company said it generated more than $13 billion in net profit in 2024 and over $10 billion year-to-date in 2025, surpassing the earnings of many major financial institutions. According to the firm, these profits bolster its excess reserve buffer and reinforce long-term stability beyond the scope of S&P’s analysis.

Despite the dispute, S&P noted the score could improve if Tether reduces exposure to riskier assets and provides fuller disclosure about reserve composition and key financial partners. Tether said it welcomes the opportunity for S&P to review its framework directly and evaluate USDT using “real-world market dynamics” rather than traditional models. The news follows the assessment from the New York-based financial giant Jefferies, which discussed Tether’s massive gold allocation.

FAQ ❓

• What did S&P say about USDT?
  S&P cut USDT’s stability score to its lowest level, citing rising exposure to higher-risk assets and limited reserve disclosure.
• How did Tether respond to the downgrade?
  Tether said S&P relied on outdated models and ignored USDT’s decade-long redemption record and expanding reserves.
• Why did S&P highlight bitcoin exposure?
  The agency said USDT’s bitcoin allocation now exceeds its disclosed reserve buffer and could pressure collateralization in a sharp downturn.
• What does Tether say supports long-term stability?
  Tether points to its Treasury holdings, record profits and real-time reporting as evidence of USDT’s resilience.

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