S&P downgrades Tether (USDT) stability rating to lowest level…"buffering capacity weakened"

The stablecoin Tether (USDT) has received the lowest stability assessment from international credit rater S&P Global Ratings. Tether's reserve composition and disclosure transparency issues and the increased share of high-risk assets were cited as the main causes.

On the 26th (local time), according to crypto-focused media The Block, S&P Global Ratings downgraded the stability assessment of USDT issued by Tether to the lowest, five-step rating. S&P diagnosed that "USDT does not have sufficient buffering mechanisms to absorb declines in the value of highly volatile assets such as Bitcoin (BTC)."

According to the report, Tether's disclosure and reserve governance issues remain unresolved, and information on the custodians responsible for reserve composition is also not clearly disclosed. It also pointed out that the share of high-risk assets such as corporate bonds, gold, collateralized loans, and private investments increased from 17% last year to 24% as of September this year, expanding risk exposure.

S&P added, "If high-risk asset exposure is reduced and the composition of reserves, and the creditworthiness information of banking and custodian partners are sufficiently disclosed, the stability rating could improve."

USDT is the world's largest stablecoin by market capitalization and serves as a key pillar of global crypto liquidity, so attention is focused on the potential market impact of this downgrade.