Tether Faces Downgrade By S&P Global Amid Concerns Over Disclosure And Assets Holdings
Tether, the entity behind the world’s largest stablecoin by market capitalization, USDT, has skilled a downgrade in its score by S&P Global. This determination, made public on Wednesday, stems from what the company describes as “persistent gaps in disclosure” and a rising allocation of “high-risk property” inside Tether’s reserves.
The property highlighted embody Bitcoin (BTC), gold, company bonds, secured loans, and different investments, all of which entail varied dangers, together with credit score, market, rate of interest, and international trade vulnerabilities.
Tether CEO Responds To S&P Downgrade
In a latest analysis notice, S&P Global detailed that this improve got here as a part of a brand new evaluation scale applied in 2023, starting from 1 to five. This scale evaluates the danger related to completely different stablecoins.
Following the evaluation, S&P rated Tether’s USDT stablecoin as “5 (weak),” marking it because the lowest attainable rating and down from its earlier score of “4 (constrained).” S&P expressed considerations relating to the restricted perception Tether gives into the creditworthiness of its custodians and counterparties.
Despite this, Tether’s CEO, Paolo Ardoino, responded in a social media publish on X (previously Twitter) stating, “We put on your loathing with delight.” He argued that conventional credit standing strategies utilized by companies like S&P arose from a system that has faltered, main regulators to problem these legacy fashions.
Ardoino contended that Tether stands out as a “overcapitalized” group inside the monetary sector, claiming it doesn’t harbor “poisonous reserves.” He additional recommended that S&P’s strategies are higher suited to standard banks and insurers with opaque monetary histories, fairly than being relevant to digital asset issuers who function underneath completely different reserve constructions.
Ardoino’s remarks point out a perception that the company’s downgrade signifies discomfort inside conventional finance towards entities like Tether that purpose to transcend a “damaged monetary system.” The agency’s CEO noted:
The conventional finance propaganda machine is rising anxious when any firm tries to defy the power of gravity of the damaged monetary system. No firm ought to dare to decouple itself from it.
Largest Independent Gold Holder
In the aftermath of the downgrade, Tether strongly rejected S&P’s characterizations, emphasizing its resilience via varied monetary crises, together with banking collapses, trade failures, liquidity challenges, and excessive market fluctuations—all whereas sustaining full stability and the power to redeem USDT.
Tether additionally pointed to its issuance of roughly $184 billion value of USDT, assuring stakeholders that it holds adequate reserves, together with US Treasuries and different property, to fulfill redemptions.
Notably, latest studies from the Financial Times reveal that Tether has emerged as the most important impartial holder of gold globally, highlighting the agency’s rising publicity to non-traditional reserve property.
According to the report, the stablecoin issuer purchased extra gold within the final quarter of the 12 months than any central financial institution on the planet. The figures present that the agency purchased 26 tons of gold, including to its substantial gold reserve of practically 120 tons.
Featured picture from DALL-E, chart from TradingView.com
