Tether Fights Back as S&P Downgrade Fuels Doubts

While Arthur Hayes warned that Tether’s exposure to gold and Bitcoin could threaten solvency in a major downturn, former Citi analyst Joseph Ayoub countered that Tether is far better capitalized and more profitable than critics suggest. The debate is part of a wider divide over the powerful stablecoin issuer’s true balance-sheet strength.

Tether Slams S&P Weak Rating

Tether is pushing back hard against S&P Global’s decision to downgrade USDT’s ability to maintain its dollar peg, and argues that the ratings agency relied on an incomplete picture of the company’s balance sheet and long-term financial strength. The downgrade labeled USDT’s peg stability as “weak,” and immediately sparked fresh waves of fear and uncertainty around the world’s largest stablecoin. However, Tether CEO Paolo Ardoino and several analysts say the concerns are overstated.

According to Ardoino, S&P’s assessment ignored a big portion of Tether’s total assets and revenue streams. Pointing to the company’s Q3 2025 attestation, he said the Tether Group held roughly $215 billion in total assets at the end of the quarter, against about $184.5 billion in stablecoin liabilities. He explained that the company had about $7 billion in excess equity sitting on top of its reserves, in addition to some $23 billion in retained earnings in the broader Tether Group. 

That equity, he argued, is a critical buffer that S&P failed to include in its evaluation. Ardoino also mentioned that Tether generates roughly $500 million per month in base profits from US Treasury yields alone, which is a revenue stream that he says strengthens the company’s position and was not adequately reflected in the rating.

The downgrade also reignited debate among market analysts over the composition and resilience of Tether’s reserves. Arthur Hayes, founder of BitMEX, suggested that Tether has been accumulating gold and Bitcoin to offset declining income as the Federal Reserve cuts interest rates. While Hayes believes those assets could appreciate, he warned that a sharp downturn of about 30% could theoretically erase Tether’s equity and push USDT into insolvency.

However, not everyone agrees with that interpretation. Joseph Ayoub, formerly Citi’s lead digital asset analyst, rejected Hayes’ concerns and said his extensive research into Tether revealed a far more robust financial structure. According to Ayoub, Tether’s true asset base is larger than what is publicly reported, its business profitability is enormous, and its collateralization is stronger than that of traditional banks despite the company having only about 150 employees. That combination, he argued, makes predictions of imminent instability unfounded.