Tether has forcefully defended the stability of its reserves after S&P Global gave USDT its lowest rating for maintaining a dollar peg, intensifying long-running debates around transparency and risk management in the stablecoin sector.
The rating downgrade issued on 29 November cited Tether’s growing exposure to volatile assets such as Bitcoin and gold, raising concerns about whether the world’s largest stablecoin could remain fully backed in times of market stress.
Tether CEO Rejects S&P’s Assessment
Tether CEO Paolo Ardoino criticized the rating as incomplete and misleading, arguing that the agency failed to consider the company’s broader financial structure, including additional equity and substantial income generated from U.S. Treasury investments.
According to Ardoino, Tether’s latest quarterly attestation shows:
- Total group assets: ~$215 billion
- Stablecoin-related liabilities: ~$184.5 billion
- Excess equity: ~$7 billion
- Retained earnings: ~$23 billion
- Estimated profits from U.S. Treasuries: ~$500 million per month
He asserted that USDT remains overcollateralized, and that S&P’s methodology does not accurately reflect Tether’s consolidated financial strength.
Analysts Split on Stability Risks
The downgrade has reignited discussion among industry experts about Tether’s investment strategy.
- Arthur Hayes, co-founder of BitMEX, warned that a 30% drop in Tether’s Bitcoin and gold holdings could theoretically erase its equity buffer, creating a risk of temporary insolvency. He believes Tether acquired these assets partly to offset an expected decline in Treasury yields if U.S. interest rates fall.
- In contrast, former Citi crypto analyst Joseph Ayoub dismissed the concerns, saying critics underestimate Tether’s profitability and operational efficiency. According to him, the company runs with a small workforce, generates billions annually from Treasury returns, and may possess additional undisclosed buffers. Ayoub argues Tether is “better collateralized than many traditional banks.”
Ambition vs. Transparency
Tether is reportedly aiming for a future valuation near $500 billion, supported by its dominant position in global crypto trading. However, the clash between Tether and S&P underscores a familiar tension:
rapid growth on one side, regulatory skepticism on the other.
The stablecoin’s long-term credibility will likely depend not just on the strength of its assets, but also on its ability to satisfy rising demands for clearer disclosures and stronger oversight.
