S&P downgrades USDT's dollar peg rating to lowest score

S&P Global Ratings just slammed Tether's USDt with the absolute worst score on their stablecoin stability scale — basically saying they're not confident it can maintain that crucial $1 peg.

The "weak" rating comes down to some major red flags: Tether's backing USDt with high-risk assets like Bitcoin, gold, loans, and corporate bonds that could go volatile AF.

Adding to the drama — Tether's based in El Salvador and regulated by their National Commission of Digital Assets (CNAD), which S&P says has way looser requirements for stablecoin reserves.

They also called out the lack of proper audits and proof-of-reserve reports. But here's the twist — S&P admits 75% of USDt's backing is actually in low-risk US Treasurys and short-term financial instruments.

Tether's response? They're calling the report "misleading" and "strongly disagree" with S&P's take, saying it "fails to capture the nature, scale, and macroeconomic importance of digitally native money."

CEO Paolo Ardoino went full scorched earth on financial ratings agencies: “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 ratings, collapsed.”

This all goes down during a landmark year for stablecoins — US regulations passed, Trump admin pushing stablecoins to maintain dollar dominance, and the entire market cap just topped $300 billion.

Tether is now the 17th largest holder of US Treasurys globally — holding over $112 billion in short-term US government securities. That's more than entire countries like South Korea, Saudi Arabia, and Germany.

They've also stacked 116 tons of gold in reserves — rivaling actual nation-states and central banks.

Between the gold hoard, massive US Treasury holdings, and their power to mint/redeem digital dollars, analysts are saying Tether's basically operating like a central bank now.