Standards and Poor’s (S&P) Global Ratings has lowered Tether’s Stablecoin Stability Assessment to its lowest level, “weak,” or numerically “5.”
This report, which is meant to assess the ability of tether (USDT) to maintain its peg, cites a variety of potential problems with its reserves, including its exposure to high-risk assets.
These high-risk assets “include bitcoin (BTC), gold, secured loans, corporate bonds, and other investments, all with limited disclosures and subject to credit, market, interest-rate, and foreign-exchange risks.”
Read more: Tether claims billions in profits as it grows ‘secured loans’
Specifically, the report also highlights that Tether’s reserves are, in theory, exposed to a collapse in the price of BTC, stating, “BTC now represents about 5.6% of USDT in circulation, exceeding the 3.9% overcollateralization margin, indicating the reserve can no longer fully absorb a decline in its value.
“A drop in BTC’s value combined with a decline in value of other high-risk assets could therefore reduce coverage by reserves and lead to USDT being undercollateralized.”
Additionally, the report points out that Tether provides very few details about its counterparties, making full assessments of their creditworthiness or risk more difficult.
S&P Global Ratings also highlights that Tether’s increasing web of investments is supposedly kept separate from the core reserve, but it additionally highlights that “there is limited public disclosure on group-level governance, internal controls, and the segregation of activities.”
| Asset | Rating |
|---|---|
| USDT | Weak-5 |
| USDC | Strong-2 |
| FDUSD | Constrained-4 |
| TUSD | Weak-5 |
| FRAX | Weak-5 |
| EURC | Strong-2 |
| USDe | Weak-5 |
| USDS | Constrained-4 |
| USDP | Strong-2 |
This rating puts Tether in the same category as TrueUSD, which has lost access to nearly all of its reserves.
Tether’s largest competitor, USDC issued by Circle, has a rating of “Strong.”
Despite some of these potential problems in the Tether reserves, the company is making a tremendous deal in profits, $10 billion over the first three quarters of 2025, according to Tether’s blog posts.
This means that those profits could have been sufficient to remove BTC from the reserves if it chose to.
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Source: https://protos.com/sp-global-ratings-says-tethers-stability-is-weak/