S&P Global downgrades Tether's stability rating to weakest level
Key Takeaways
- S&P Global has downgraded Tether's (USDT) stability rating to its lowest level.
- The downgrade was prompted by Tether's increased exposure to volatile assets like Bitcoin and gold in its reserves.
S&P Global, the financial services and credit rating company, today downgraded Tether’s stability rating to its weakest level. The move targets Tether’s stablecoin, USDT, which is the largest in the cryptocurrency market, with more than $184 billion in circulation.
The rating agency cited concerns over Tether’s increased exposure to volatile assets like Bitcoin and gold in its reserves, which creates potential depegging risks for the stablecoin. S&P Global also pointed to gaps in disclosures and governance as factors in the downgrade.
Tether has shifted its reserve composition to include allocations to Bitcoin and gold while maintaining a majority in cash and Treasury bills. The company’s USDT stablecoin is designed to maintain its dollar peg through these asset reserves.
The downgrade highlights perceived risks associated with holding volatile assets as backing for a stablecoin intended to maintain price stability.
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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