Downgrade renews long-standing scrutiny of the stablecoin issuer’s reserves and transparency
Tether is facing renewed criticism after S&P Global lowered its rating on the USDT stablecoin to its weakest score last week. The move revived long-running debates over the company’s reserve composition and reporting practices, prompting sharp reactions across the crypto community.
S&P’s decision to shift USDT from a level 4 to 5 on its stablecoin stability scale cited familiar concerns about limited disclosure, alongside a newer factor: Bitcoin now accounts for more than 5% of Tether’s reserves. The agency suggested that sustained declines in BTC could introduce undercollateralization risk. While these issues aren’t new, their resurfacing during a difficult market environment drew swift public responses.
Tether CEO Paolo Ardoino dismissed the downgrade, framing it as a predictable critique from traditional finance. “We wear your loathing with pride,” he said, arguing that the company is overcapitalized and free of the “toxic reserves” associated with legacy institutions.
Outside voices also jumped into the debate. Investor Jason Calacanis urged Tether to sell its Bitcoin holdings, keep only U.S. Treasuries, and obtain multiple U.S.-based audits — advice that quickly ignited pushback from Bitcoin supporters. Many pointed out the irony of promoting Treasuries, given past volatility tied to interest-rate shocks.
The dialogue intensified after a prominent financial commentator argued that the absence of a full, independent audit remains a fundamental concern. “When a company resists an audit, markets assume there’s a reason,” the commentator said, adding that transparent verification is “the minimum expected from an issuer handling tens of billions in digital dollars.”
With USDT playing a central role in global crypto trading, the downgrade has rekindled an unresolved question: how much scrutiny — and what kind — the world’s largest stablecoin should face as markets evolve.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.