Rather than questioning the peg itself, the agency highlighted the growing presence of volatile assets — particularly Bitcoin — inside the reserve mix.
S&P’s new assessment argues that the stablecoin issuer has moved further away from a conservative balance sheet. While Tether frequently promotes its holdings of U.S. Treasury bills, S&P says that the public reserves data paints a more complex picture that also includes corporate debt, secured loans, gold and a rapidly growing Bitcoin position.
Analysts warned that if Bitcoin experiences a deep correction, the shift could meaningfully shrink the cushion protecting the peg — especially during moments of heightened redemptions.
The latest transparency report from Tether revealed the biggest point of concern: the spike in Bitcoin holdings. The company now controls more than 87,700 BTC, representing 5.4% of reserves, compared to 3.6% previously. USDT’s circulating market value is around $184 billion, meaning sharp BTC drawdowns carry measurable collateral implications.
S&P analysts Rebecca Mun and Mohamed Damak said that in extreme downside scenarios, USDT could temporarily become undercollateralized, not because of Treasury exposure, but because of high-volatility assets sitting beside them.
Tether’s leadership does not share the agency’s view. Paolo Ardoino responded publicly, saying that the downgrade demonstrates hostility from traditional finance rather than an objective measurement of risk. He claimed that Tether’s war chest is “overcapitalized” and free from the toxic debt typical of many legacy institutions that historically received high ratings before collapsing.
According to Ardoino, Tether remains one of the most profitable entities in the digital-asset industry and should be seen as proof that alternative financial structures can work without relying on legacy banking.
The downgrade does not force Tether to change its reserve structure, but it will likely intensify the push for full independent audits — something the company has not yet provided. Whether or not USDT faces redemption pressure will depend less on ratings and more on how Bitcoin performs during periods of macro turbulence.
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