- Tether faces renewed scrutiny after S&P Global downgraded its USDT stablecoin to the lowest stability rating.
- Concerns focus on the opacity of Tether’s reserve disclosures and the exposure of reserves to Bitcoin, which now accounts for over 5% of backing assets.
- Tether defends its financial position and criticizes traditional finance institutions for skepticism.
- Calls for more transparency and audits come from investors and financial observers, emphasizing the importance of verifying the backing of stablecoins.
- The debate highlights ongoing tension between crypto companies and traditional finance regarding stablecoin reserve management and reporting.
Tether, the issuer of the USDT stablecoin, recently had its USDT rating downgraded by S&P Global to the weakest possible level on the company’s stablecoin stability scale. The downgrade occurred shortly before the U.S. Thanksgiving holiday. S&P Global cited concerns over the lack of transparency in Tether’s reserve reporting and highlighted that bitcoin now constitutes more than 5% of the assets backing USDT. This increase in bitcoin exposure raises the risk that further BTC price declines could cause undercollateralization.
Despite the downgrade and recurring suspicions within the crypto industry, USDT has maintained its peg to the U.S. dollar and remains redeemable at any time. Tether has prospered financially, generating earnings above $10 billion through the first nine months of 2025, comparable to major Wall Street firms like Goldman Sachs and Morgan Stanley.
In response to the S&P Global move, Tether CEO Paolo Ardoino defended the company, stating on X, “We wear your loathing with pride,” and criticized traditional finance as being fearful of a company challenging the conventional financial system. Ardoino asserted that Tether is “the first overcapitalized company in the financial industry, with no toxic reserves,” portraying the stablecoin issuer as evidence of flaws in traditional finance.
Entrepreneur and angel investor Jason Calacanis added to the discussion on X, advising Tether to sell all its bitcoin holdings, retain only U.S. Treasury securities as reserves, and obtain multiple audits from American firms. This proposal sparked pushback from bitcoin advocates who highlighted the risks Calacanis himself emphasized during the 2023 Silicon Valley Bank crisis, where Treasury holdings contributed to losses.
Calls for independent audits also came from financial blogger Quoth the Raven (QTR), who wrote on Substack that refusing a full audit often suggests underlying problems. He emphasized that audits are the minimum expectation for enterprises issuing large amounts of synthetic dollars that support widespread markets.
The ongoing dialogue underscores persistent demands for clearer reserve disclosures and accountability from stablecoin issuers amid fluctuating asset prices and market volatility.
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