S&P gives USDT a “5 (weak)” risk rating.
Concerns raised over riskier reserve assets.
Lack of transparency worsens investor confidence.
In a major development for stablecoin markets, S&P Global has downgraded Tether’s USDT risk rating to “5 (weak)”, marking the lowest score on its stablecoin stability scale. The decision follows mounting concerns over Tether’s reserve composition and its ongoing lack of transparency.
Tether’s USDT is the most widely used stablecoin globally, with a market cap exceeding $80 billion. Despite its dominance, regulatory bodies and financial analysts have repeatedly flagged issues around its backing assets and the consistency of its disclosures.
S&P’s recent move adds weight to those concerns and is expected to trigger a broader discussion on the reliability of stablecoins in the crypto ecosystem.
Why Did S&P Lower the Rating?
According to S&P Global, the downgrade to “5 (weak)” was due to two primary issues:
Riskier Reserve Assets:
Tether has reportedly increased its exposure to higher-risk assets within its reserves. While Tether claims to be fully backed, the exact breakdown of these assets has often been unclear or overly broad. S&P noted that the shift away from traditional, low-risk assets such as U.S. Treasury bills to riskier instruments significantly impacts its risk profile.Lack of Transparency:
The rating agency also cited persistent gaps in Tether’s public disclosures. Unlike some competitors who have moved toward real-time audits and detailed reporting, Tether has yet to consistently offer the same level of transparency. This lack of openness has made it difficult for investors to assess the true stability of the token.
LATEST: S&P Global downgraded Tether’s USDT to “5 (weak)”, the lowest score on its stablecoin risk scale, citing an increase in higher-risk assets in its reserves and persistent gaps in disclosure. pic.twitter.com/5910eSv8z6
— Cointelegraph (@Cointelegraph) November 26, 2025
What This Means for the Crypto Market
Tether’s USDT risk rating downgrade could have ripple effects across the crypto industry. As USDT is widely used for trading, lending, and DeFi protocols, any drop in confidence can lead to market volatility. It may also put pressure on Tether to improve its disclosure practices and reassess its asset strategy.
Regulators are likely to scrutinize the stablecoin market more closely following this rating. Other stablecoins with clearer transparency, such as USDC or DAI, may benefit from increased trust in comparison.
For now, S&P’s action serves as a cautionary signal for both institutional and retail investors relying heavily on Tether for liquidity and stability.
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