Bitcoin exposure exceeds safe limits, S&P downgrades USDT to lowest stablecoin rating.

The credit rating agency S&P Global (S&P Global) has downgraded Tether's USDT stability assessment to Level 5, which is the lowest level in its rating system. S&P Global Ratings pointed out that the proportion of high-risk assets in USDT reserves has increased, and there is insufficient information disclosure, warning that this stablecoin no longer has enough buffer to absorb Bitcoin's fall.

S&P Stablecoin Rating Method

S&P will begin evaluating stablecoins for the first time at the end of 2023, with the assessment focusing primarily on evaluating asset quality risks, including credit, market value, and custody risks, and then further analyzing the over-collateralization requirements and liquidation mechanisms. Scores range from 1 to 5, from strong to weak. After the asset assessment, S&P will add five additional areas for analysis, including governance, legal and regulatory frameworks, redeemability and liquidity, technology, and third-party dependency and track record, to fine-tune the final score for stablecoins from 1 to 5. At that time, S&P rated USDT with a score of 4.

( S&P stablecoin rating report: USDC rated highest, USDT “barely” 4 points )

The proportion of Bitcoin and other risk assets is rising, downgrading USDT to the worst rating of 5.

S&P downgraded the stability rating of USDT from the previous “4-Restricted” to “5-Weak.” S&P stated that its assessment reflects the increase of high-risk assets in USDT reserves over the past year, which include Bitcoin, gold, secured loans, and corporate bonds, as well as insufficient information disclosure.

Bitcoin currently accounts for about 5.6% of USDT's circulation, exceeding the 3.9% excess collateral safety margin, which means that the reserves can no longer fully absorb the impact of Bitcoin's fall. The decline in the value of Bitcoin and other high-risk assets may reduce the coverage ratio of the reserves, leading to insufficient collateral for USDT.

Other drawbacks include Tether providing limited information about the credit status of its custodians, counterparties, or bank account providers. Additionally, there is insufficient transparency in reserve management, a lack of asset segregation to prevent issuer bankruptcy, and restrictions on directly redeeming USDT for Tether, among other issues.

Tether CEO: We take pride in your disdain.

Tether CEO Paolo Ardoino is very dissatisfied with this, sarcastically saying, “We take pride in your disdain.” He posted on X:

“The classic rating models constructed by traditional financial institutions have historically misled private and institutional investors to invest their wealth into companies that, even if rated investment grade, ultimately collapse, forcing global regulators to question these models as well as the independence and objectivity of all major rating agencies. Tether has created the first capital-rich and surplus company in the financial industry, with no toxic reserves, and has remained highly profitable to this day. Tether proves that the shortcomings of the traditional financial system are so severe that even the 'naked emperor' feels fear.”

to S&P regarding your Tether rating:

We wear your loathing with pride.

The classical rating models built for legacy financial institutions, historically led private and institutional investors to invest their wealth into companies that despite being attributed investment grade…

— Paolo Ardoino (@paoloardoino) November 26, 2025

USDC remains at a suboptimal rating, with most stablecoin ratings better than USDT.

In addition to Circle's USDC and EURC stablecoins maintaining a sub-optimal rating of 2-Strong, S&P's ratings for other stablecoins are as follows:

2-Strong: EURC, USDC, GUSD, USDP

3-Adequate: EURCv, USDM

4-Constrained: FDUSD, USDS, DAI

5-Weak: USDT, TUSD, FRAX, USDe

As the world's largest stablecoin, USDT has received the lowest rating, so it's no wonder that CEO Paolo Ardoino is so indignant.

This article states that Bitcoin is exposed beyond the safety margin, and S&P has downgraded USDT to the lowest rating for stablecoins, first reported by Chain News ABMedia.