Bitcoin News Update: S&P Highlights Tether's Lack of Transparency and Risky Reserves as a Potential Stability Concern
- S&P downgrades Tether's USDT to "weak" due to high-risk assets (Bitcoin, gold , bonds) and reserve transparency gaps. - Bitcoin's 5.6% USDT reserve share exceeds overcollateralization thresholds, risking undercollateralization if prices fall. - Regulatory scrutiny intensifies as Tether shifts reserves toward volatile assets, threatening dollar peg stability and systemic crypto risks. - Lack of asset segregation and weak redemption mechanisms amplify concerns about insolvency risks and governance gaps. -
S&P Global Ratings has lowered its stability assessment of Tether's
The ratings agency pointed out that Bitcoin now makes up about 5.6% of USDT’s $184.4 billion supply,
In addition to Bitcoin, Tether’s reserves include $12.9 billion in gold and corporate bonds, all of which present credit, market, and liquidity risks.
This downgrade comes at a time when
The consequences for the stablecoin sector are considerable. USDT’s leading role in cross-border payments and decentralized finance (DeFi) means that any loss of trust in its stability could spark broader liquidity issues.
At present, Tether’s ability to manage these risks will depend on how well it can balance the pursuit of higher-yielding assets with the imperative of maintaining stability. The downgrade acts as a warning that the crypto sector’s dependence on opaque collateral arrangements may not be viable in a market that is increasingly risk-averse.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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