S&P Global Downgrades Tether’s USDT Stability Rating to Weakest Level

On November 26, PANews reported that S&P Global downgraded Tether’s USDT stability rating to “5” due to increased risky assets and insufficient reserve buffers.

This downgrade raises concerns about Tether’s ability to maintain its peg to the U.S. dollar, potentially impacting market confidence and stability.

S&P Lowers Tether’s Rating Due to Risky Exposures

S&P Global has downgraded Tether’s USDT stability rating to “5,” the weakest level recorded. This decision is based on increased risky asset exposure and insufficient disclosure concerning reserves’ ability to withstand significant Bitcoin price drops. The current support of 5.6% of USDT by Bitcoin exceeds the established buffer of 3.9%.

Immediate implications include potential vulnerabilities in Tether’s reserve, notably if high-risk assets experience simultaneous substantial value declines. Tether’s rise in risky asset ratio to 24% prompts concerns over USDT’s consistent peg maintenance.

“S&P Global Ratings has reassessed the ability of Tether (USDT) to maintain its peg to the U.S. dollar to 5 (weak) from 4 (constrained).” – S&P Global Ratings

Tether’s Transparency Under Scrutiny Amid Market Concerns

Did you know? S&P Global’s rating adjustment signals potential risks similar to past stablecoin disruptions, highlighting the importance of reserve transparency and asset risk management in maintaining investor confidence.

According to CoinMarketCap, Bitcoin’s current price is $89,678.93 with a market cap of $1.79 trillion. Despite 24-hour trading volumes of $60.86 billion, Bitcoin faces a 30-day decline of 22.38%. Yet, the Bitcoin network maintains its circulating supply of 19,953,446 BTC.

Coincu analysts suggest potential regulatory responses if reserve disclosure issues persist. Tether’s case emphasizes managing volatile asset backing to prevent market instabilities. Enhanced audits and real-time reserves reporting could mitigate persistent concerns over USDT’s financial positioning.