Tether's Bitcoin Bets Trigger S&P Global Downgrade

S&P Global has officially downgraded Tether -- the USDT issuer -- from a rating of 4 (“constrained”) to 5 (“weak”), the lowest score possible on its stablecoin stability scale.

The firm, one of the largest financial analytics companies in the world, introduced the Stablecoin Instability Assessment, in which it measures the ability of stablecoins to maintain their peg to the U.S. dollar, based on characteristics reserve quality, liquidity, and regulatory oversight. 

An increase in what the S&P Global refers to as "high risk assets", which include Bitcoin and other cryptocurrencies, was a key driver behind the downgrade. Even though up to 80% of Tether's reserves remain backed by short-term treasury bills, the agency highlights that Tether's reserves have grown more exposed to holdings like Bitcoin, corporate bonds, and loans.

"A decline in the price of bitcoin or the value of other higher-risk assets, could therefore reduce collateral
coverage and result in USDT becoming undercollateralized." The S&P Global wrote. "We believe the increasing share of risky assets exposes USDT's reserves to greater market fluctuations."

Stablecoins like USDC, GUSD, and USDP are the only ones so far able to maintain a rating of 2 (Strong) with the agency. 

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Tether CEO Fires Back

Tether CEO Paolo Ardoino responded on Twitter to the news of the downgrade.

According to the executive, the rating reflects more about the shortcomings of traditional finance than the strength of Tether itself.

“We wear your loathing with pride,” Ardoino wrote, positioning Tether as a company deliberately outside the orbit of conventional finance. He directly attacked the S&P Global to which he referred to as a "traditional finance propaganda machine".

Ardoino emphasized that Tether is “the first overcapitalized company in the financial industry, with no toxic reserves,” and highlighted its profitability despite ongoing criticism. In his view, Tether’s resilience and profitability demonstrate that the stablecoin issuer has built a model fundamentally different from the institutions that rating agencies were designed to evaluate.

In 2025, the stablecoin issuer became one of the fastest accumulators of gold and U.S. Treasuries-- even more so than some countries. By October, Tether owned over $135 billion in U.S. debt, making it a larger holder than nations like South Korea and Germany. 

At the same time, the company has also been increasing its stockpile of digital assets. In Q1 2025, Tether added 8,888 BTC (worth about $735 million at the time) to its reserves. Since 2023, the company has committed to use up to 15% of its quarterly profits to buy $BTC.