Concerns about the composition of Tether's reserves have been raised, with BTC and other "high-risk" assets being highlighted.
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S&P identified Tether's inclusion of highly volatile assets, such as Bitcoin (BTC), gold, loans, and corporate bonds, as a key risk factor. The report stated, "Bitcoin accounts for 5.6% of all USDT in circulation, exceeding the collateralization ratio of 103.9% and the overcollateralization threshold of 3.9%," and warned that a price drop could weaken collateral stability. Furthermore, Tether's regulatory transparency rating was low due to its Salvadoran nationality and its oversight by the National Digital Assets Commission (CNAD).
S&P also cited Tether's failure to provide sufficient external audits or regular reserve certification reports as another factor in its downgrade. However, it added that approximately 75% of Tether's reserves are held in U.S. Treasury securities and short-term safe assets.
Tether strongly opposed S&P's rating. In a statement, Tether CEO Paolo Ardoino criticized the report, saying, "It misrepresents the role of digital native currencies and the global utility of USDT." He added, "Traditional financial rating models have already failed to predict the collapse of numerous financial institutions in the past."
Foreign media outlets noted that this report was released amidst changing market conditions, including discussions on US stablecoin regulation, the Trump administration's prioritization of stablecoins, and the growing market capitalization of stablecoins. Tether currently holds over $112 billion in US Treasury bonds, making it the 17th-largest holder of government bonds worldwide. It also holds 116 tons of gold, leading some analysts to interpret Tether as "acting essentially like a central bank."
Reporter Jeong Ha-yeon yomwork8824@blockstreet.co.kr
