S&P Downgrades Tether USDT Stability Rating to Lowest Possible Grade

The world's largest stablecoin issuer, Tether, received a "5" rating, the lowest possible, from S&P analysts regarding USDT's ability to remain pegged to the US dollar.

Previously rated "4," USDT's new "5" rating indicates a "weak" peg stability.
Reasons for the downgrade include increasing exposure to high-risk assets like Bitcoin, gold, secured loans, corporate bonds, and others.
Concerns were raised about USDT's structure, including limited transparency on reserves, lack of regulatory framework, no asset segregation, and redeemability issues.

The Stablecoin Stability Assessment

Tether's market capitalization is around $185 billion, dominating the stablecoin market.
S&P acknowledges USDT's market share and relative stability despite cryptocurrency market challenges.
A key issue is that high-risk assets constitute 24% of Tether’s total reserves as of Sept. 30, 2025, up by 7% year-over-year.
Bitcoin comprises 5.6% of USDT in circulation, exceeding the overcollateralization margin and posing a risk if asset values decline further.