Bitcoin News Update: S&P Lowers Tether's Rating Due to Risky Holdings and Lack of Transparency, Raising Concerns About Stablecoin Stability

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Bitget-RWA2025/11/27 01:10

By:Bitget-RWA

- S&P downgrades Tether's USDT to "weak," citing high-risk reserves (24% in Bitcoin/gold) and opaque operations. - Tether's 5.6% Bitcoin allocation exceeds overcollateralization margins, risking undercollateralization amid crypto volatility. - Analysts warn Tether's gold/Bitcoin purchases (2% of global demand) could destabilize markets, while regulatory scrutiny intensifies. - Despite $10B+ 2025 profits, Tether defends its "digital dollar" role, though S&P flags structural risks like custodian transparency

S&P Global Ratings has lowered its rating for Tether's

USDT

stablecoin from "constrained" to "weak," which is the lowest grade on its stability scale. This downgrade highlights increasing worries about the makeup of Tether's reserves, which now feature riskier assets such as

Bitcoin

and gold, along with ongoing concerns about the company's limited operational transparency. The ratings firm

cautioned that a drop in the value of these assets

could result in USDT being undercollateralized, putting its 1:1 peg to the U.S. dollar at risk.

This rating cut comes after Tether shifted its reserve allocation strategy, increasingly channeling funds into alternative assets. By September 30, 2025, higher-risk assets made up 24% of Tether's reserves, a 7% increase from the previous year. S&P reported that Bitcoin alone accounted for 5.6% of USDT's supply,

exceeding the 3.9% overcollateralization threshold

, meaning Tether's reserves are no longer able to fully offset potential losses from Bitcoin price swings. This

Bitcoin News Update: S&P Lowers Tether's Rating Due to Risky Holdings and Lack of Transparency, Raising Concerns About Stablecoin Stability image 0

demonstrates the mounting risks associated with Tether's increasingly diverse asset base. The company has also

increased its gold acquisitions

, holding 116 tons of gold—an amount similar to the reserves of central banks in South Korea and Hungary—as of October 2025.

Analysts at Jefferies observed that Tether's purchases of gold and Bitcoin could have an impact on the broader gold market. In the third quarter, Tether's gold buying represented nearly 2% of global demand, and its Bitcoin holdings reached $9.9 billion by the end of Q3.

Tether's bold diversification approach

, which also involves investments in gold mining companies and secured lending, has sparked debate over its risk management.

S&P also pointed out other structural issues, such as a lack of transparency in how reserves are managed, no clear separation of assets to guard against insolvency, and regulatory shortcomings. The agency further criticized

Tether

for not providing adequate information about the financial health of its custodians and banking partners. These issues, together with Bitcoin's recent 30% drop from its peak,

heighten the risks faced by USDT investors

Tether, which commands 71% of the stablecoin sector with a circulation of $184 billion, has stood by its approach. The company maintains that its reserves are sufficient to support USDT and highlights its position as a "digital dollar" that offers both stability and global reach. Still, S&P stated that despite USDT's resilience during market stress, the downgrade represents a "neutral" outlook rather than a "negative" one,

indicating a changing risk landscape

This downgrade brings renewed attention to stablecoins as regulators and investors push for more transparency. Tether continues to report strong financial results, with net profits surpassing $10 billion in the first nine months of 2025. Nevertheless, the company's dependence on high-risk assets and its opaque operations may undermine confidence, especially as Bitcoin remains volatile and gold supply tightens.

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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