In a move that shakes the foundations of the crypto ecosystem, S&P Global today downgraded the stability rating of Tether (USDT), the world's largest stablecoin, from 4 ("restricted") to 5 ("weak") on its scale for digital assets pegged to the US dollar. This decision, announced amid persistent volatility in the Bitcoin market, puts the robustness of stablecoins as stores of value in the cryptocurrency universe at the center of the debate. With a market capitalization exceeding $180 billion, USDT represents more than 60% of the sector, and its downgrade could reverberate with global confidence.
S&P's reasons are clear and worrying. The agency cites Tether's increased exposure to risky assets, such as Bitcoin, which now comprises 5.6% of its reserves, exceeding the overcollateralization threshold of 3.9%. This portion, although a minority, creates vulnerabilities to price drops, such as the recent ones in Bitcoin. In addition, reserves are held in gold, corporate bonds, secured loans, and other instruments with variable credit and market risks. S&P also criticizes the gaps in public disclosure: a lack of details on asset valuations and the solvency of custodians, which obscures the transparency essential for maintaining the dollar peg.
Tether has not remained silent. CEO Paolo Ardoino called the downgrade "propaganda from traditional finance," arguing that it ignores USDT's impeccable track record: it has never failed to redeem, even in past crises, and processes billions daily on exchanges and in DeFi. The company highlights its $135 billion exposure to US Treasuries—placing it among the largest global holders—and record profits: $13 billion in 2024 and $10 billion accumulated in 2025. For Tether, USDT transcends speculation; It is vital financial infrastructure in emerging markets like Turkey and Nigeria, where it facilitates remittances and dollar-denominated savings.
This downgrade comes amid regulatory maturation. Proposals like the GENIUS Act in the US require 1:1 backing with short-term government bonds and liquid assets, which would benefit competitors like Circle's USDC, with greater transparency and less exposure to volatility. Historically, stablecoins have demonstrated resilience: during the FTX collapse in 2022 and the Terra crisis in 2021, USDT maintained its peg with minimal deviations. However, today's event exposes systemic cracks. Reliance on reserves that are not purely fiat amplifies macroeconomic risks, such as inflation or recessions, which could trigger digital bank runs.
Assessing overall stability, stablecoins remain a pillar of the crypto ecosystem, with a transaction volume that rivals Visa. But the downgrade of Tether underscores the need for reforms: independent audits, conservative diversification, and regulatory compliance. While it hasn't impacted the price of USDT—which remains at $1—it erodes the perception of invulnerability. In a market where trust is the ultimate peg, this downgrade could accelerate the migration to more regulated alternatives, strengthening the sector in the long term but exposing laggards.
In conclusion, stablecoins are not on the brink of collapse, but S&P's verdict is a wake-up call. Their stability depends less on ratings and more on adaptability: radical transparency and alignment with fiat standards. For investors and users, diversification is key; for the ecosystem, regulatory evolution could transform these "stablecoins" into truly robust bulwarks.
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