S&P Downgrades Tether to 'Weak' Stability Rating, CEO Defends Reserve Strategy

S&P Global Ratings has downgraded Tether's stability rating from 'constrained' to 'weak', citing concerns over volatile reserve assets like Bitcoin and gold, as well as limited transparency and disclosure gaps. The downgrade, announced in late November 2025, highlights vulnerabilities in Tether's reserve composition, which includes over $112 billion in short-term U.S. Treasury securities alongside higher-risk allocations.

Tether CEO Paolo Ardoino publicly defended the company's financial strategy, stating on social media that Tether is 'overcapitalized, non-toxic, and consistently highly profitable.' He emphasized the company's diversified reserves and ability to maintain its peg, despite the rating impact.

Market anxiety has emerged, particularly in China where USDT is crucial for underground markets, with fears of potential undercollateralization if asset values decline. However, on-chain data from analysts at Nansen shows that USDT's peg remains firm, with 24-hour volumes exceeding $85 billion and no significant outflows or redemption pressure. Experts from Eco and Fireblocks argue that the downgrade relies on hypothetical models not aligned with USDT's actual behavior under stress, noting that institutions continue to use it for cross-border settlements and payments without disruption.