S&P downgrades Tether to lowest rating

USDT-USD -0.00% BTC-USD -0.15% GC=F +0.45%

Tether and its CEO Paolo Ardoino are pushing back after S&P Global Ratings issued its lowest assessment yet of the world’s largest stablecoin.

The clash marks one of the most public confrontations to date between a major credit-rating agency and a leading crypto issuer.

Related: Exclusive: Tether CEO Paolo Ardoino on CBDC threats

Tether downgraded to 'weak'

On Nov. 26, S&P Global Ratings downgraded Tether (USDT) to “5 (weak)”, the lowest grade on its five-point stablecoin risk scale introduced in 2023.

The agency cited “persistent gaps in disclosure” and a rising share of “high-risk assets” in Tether’s reserves, including bitcoin, gold, corporate bonds, secured loans and other investments.

S&P said these assets carry “credit, market, interest-rate, and foreign-exchange risks,” and noted that Tether provides limited insight into the creditworthiness of its custodians and counterparties.

Still, the agency acknowledged that USDT has maintained “a notable level of price stability” even during recent market volatility.

Tether founder criticizes S&P’s assessment

Ardoino responded hours later, writing:

“We wear your loathing with pride.”

In the post, Ardoino suggested that the same credit-rating methodologies S&P relies on were responsible for assigning investment-grade ratings to traditional financial institutions that later failed.

He argued that these legacy frameworks were designed for banks and insurers with long histories of opaque balance sheets, not for digital-asset issuers that operate with different reserve structures and market dynamics.

Ardoino said Tether’s “overcapitalized” model contrasts with the institutions rated by legacy agencies. He argued that S&P’s response shows traditional finance is uncomfortable with companies that “decouple” from what he called a “broken financial system.”

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Tether defends reserve practices and resilience

In response to the downgrade, Tether said it “strongly disagrees with the characterization presented in the report.”

The firm pointed to its history of withstanding banking crises, exchange failures, liquidity shocks and extreme market swings - while maintaining full stability and allowing redeemability of USDT.

Tether claims it has issued around $184 billion worth of USDT and continues to hold enough reserves - including U.S. Treasuries and other assets - to support redemptions.

The Financial Times also reported this week that Tether has become the largest independent holder of gold in the world, underscoring the company’s growing exposure to non-traditional reserve assets.

The disagreement also reflects a broader tension as stablecoins become more embedded in global markets.

With rating agencies evaluating them through legacy models and issuers defending digital-native structures, the industry remains split on what constitutes reliable risk assessment in the next generation of financial infrastructure.

This story was originally published by TheStreet on Nov 26, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.