S&P Downgraded Tether's USDT Stability Score to Its Weakest Level as Risky Reserve Assets Climbed to 24% of Holdings

S&P Global Ratings downgraded Tether's USDT stability assessment to 5 (the weakest level on its scale) in late 2025, citing that risky assets including Bitcoin, gold, secured loans, and corporate bonds with limited disclosure climbed from 17% to 24% of Tether's $181.2 billion in reserves over the prior year, despite USDT being the world's largest stablecoin with a $174 billion market cap. Why it matters: USDT is the most widely used stablecoin globally, serving as the primary trading pair and settlement currency on virtually every crypto exchange; so if Tether's reserves cannot fully back redemptions during a market downturn -- particularly a Bitcoin crash that would simultaneously devalue their BTC holdings and trigger mass USDT redemptions -- a depeg event could cascade across the entire crypto market; so every DeFi protocol using USDT as collateral (billions in TVL) would face cascading liquidations; so traders and businesses in emerging markets who use USDT as a dollar substitute for daily transactions would see their savings lose value overnight; so the systemic risk spreads to traditional finance because Tether holds approximately $135 billion in U.S. Treasury bills, making it one of the largest non-sovereign holders, and a forced liquidation could disrupt Treasury markets. The structural root cause is that Tether has never completed a full independent audit by a Big Four accounting firm despite promising one since 2017, relying instead on quarterly attestation reports that provide a snapshot of reserves at a single point in time but do not verify the continuous backing, counterparty risk, or encumbrance status of assets throughout the quarter.