S&P Global has downgraded its rating of Tether (USDT) — the world’s largest stablecoin — assigning it the lowest possible score on its five-point scale due to increased exposure to higher-risk assets and what it called “persistent gaps in disclosure.”
In a research note published Wednesday, S&P said it now ranks Tether as “5 (weak)”, down from its previous score of “4 (constrained).” The rating system, introduced in 2023, evaluates the stability and risk profile of major stablecoins pegged to traditional currencies.
A spokesperson for Tether did not immediately respond to a request for comment. The company has previously described USDT as the “leading digital dollar,” emphasizing stability and transparency.
Tether, headquartered in El Salvador, says it has issued roughly $184 billion worth of its dollar-pegged tokens and maintains sufficient reserves — largely in US Treasuries and other assets — to meet redemptions.
However, S&P noted what it described as a rising share of high-risk assets in Tether’s reserve portfolio over the past year, including Bitcoin, gold, secured loans, corporate bonds and other investments. The agency warned that these holdings come with credit, market, interest-rate and foreign-exchange risks, and are accompanied by “limited disclosures.”
S&P added that Tether continues to provide only limited information on the creditworthiness of custodians, counterparties, and banking partners involved in supporting the stablecoin’s operations.
Despite these concerns, the ratings agency acknowledged that Tether has maintained “a notable level of price stability” even during periods of heightened crypto-market volatility.
