On November 26, S&P Global Ratings abruptly downgraded the stability score of Tether (USDT), a stablecoin with a market capitalization of approximately $184 billion, to the lowest level of 5. The report specifically cited the excessively high proportion of Bitcoin, gold, and corporate bonds in USDT's reserves, arguing that this impacted the adequacy of its reserve buffer.
Hours later, Tether countered with a statement and a public statement from CEO Paolo Ardoino, claiming that the S&P model was "out of touch with reality."
Paolo Ardoino's X post is translated as follows:
Rating S&P:
We take pride in your disgust.
The historic rating models you created for traditional institutions repeatedly lured private and institutional investors into "investment grade" companies, only to collapse afterward, forcing global regulators to question these models and the independence and objectivity of major rating agencies.
The traditional financial propaganda machine becomes restless whenever a company tries to defy the "gravity" of this broken financial system. The message is clear: no one should dare to decouple.
Tether chose a different path. We created the first "over-capitalized" company in the financial industry, with no toxic reserve assets, yet still highly profitable. Tether 's success reveals a disturbing truth: the traditional system has failed so badly that it has begun to fear those who expose the "emperor's new clothes."
Credit rating downgrade triggers confidence test
According to S&P Global Ratings, high-volatility assets account for 24% of USDT's reserves, exceeding the typical level for traditional stablecoins. The Bitcoin portion alone is valued at approximately $9.9 billion, representing 5.6% of the total. Meanwhile, after deducting liabilities, the "excess buffer" available for absorbing market volatility is only $6.78 billion, or 3.9%.
S&P points out that if Bitcoin repeats its 2022 halving, the buffer will not be able to fully cover the losses, putting pressure on the 1:1 redemption commitment.
Tether officially stated that dynamic cash flow can fill the gap.
Faced with concerns about insolvency, Tether has adopted a proactive defensive strategy, emphasizing that the company is not a traditional bank, but rather a cash-generating machine capable of producing massive cash flows in a short period. According to its audited reports for the first three quarters of 2025 , Tether's profits exceeded $10 billion, and its holdings of U.S. Treasury bonds exceeded $135 billion. Management believes that if market volatility leads to book losses, quarterly earnings can recover in a very short time; S&P's static model overlooks this "dynamic recovery" capability.
Market prices are unmoved by ratings.
Following the announcement of the price reduction, USDT remained at $1 on major exchanges, without any large-scale decoupling or redemptions. Traders pointed out that the Trump administration's relatively lenient approach to cryptocurrencies, coupled with Tether's long-term and substantial holdings of US Treasury bonds, has boosted investor confidence in its dollar liquidity.
One over-the-counter market maker bluntly stated that the market is "willing to pay for a 1.7% risk gap" because Tether's daily interest income far exceeds potential volatility losses.
More importantly, a key statistic is that Tether currently holds $135 billion in U.S. Treasury bonds, making it the 17th largest holder of U.S. debt globally, surpassing South Korea and approaching Brazil's holdings. Furthermore, Tether is the largest independent holder of gold outside of central banks and does not have a widening budget deficit.
