S&P downgrades USDT stability to 5, "weak": what the agency flagged and how Tether responded
On November 26, 2025, S&P Global Ratings placed USDT in the lowest band of its stability scale. Tether disputes the methodology and says its reserves exceed the amount issued.
Historical reference: November 28, 2025. Published on this site on November 2, 2026. Dates in the text identify the period covered.
In this article
Key points
- On 11/26/2025, S&P Global Ratings downgraded USDT's stability assessment from 4 ("constrained") to 5 ("weak"), the lowest on the scale.
- The agency points to the rise in higher-risk assets in the reserves (bitcoin, gold, secured loans and corporate bonds) and the lack of transparency about custodians and counterparties.
- Tether disagrees, says the methodology is outdated and notes that USDT kept its peg and honored redemptions.
- The rating measures the ability to hold the peg to the dollar in an adverse scenario. It does not indicate that USDT has lost its value.
São Paulo, November 28, 2025 — On Wednesday (26th), S&P Global Ratings downgraded the stability assessment of USDT, Tether's stablecoin, from 4 ("constrained") to 5 ("weak"), the last step on the scale. According to Bloomberg, Decrypt and Cointelegraph, the agency cited the increase in higher-risk assets backing the token and the lack of information about who holds those assets. Tether replied the same day that it "strongly disagrees" with the assessment.
USDT is the most widely used stablecoin in the world and the basis for a good part of international payments made with virtual assets. For anyone paying a supplier abroad, the practical question is whether the rating changes the risk of receiving or sending USDT. Answering it requires separating what S&P measured from what it did not.
- USDT's stability assessment at S&P, from "constrained" to "weak" (11/26/2025)
- 4 → 5
- Share of reserves in higher-risk assets, versus 17% a year earlier (InvestNews, based on the S&P report)
- 24%
- Assets reported by Tether on 09/30/2025, against US$ 174.4 billion of USDT issued
- US$ 181.2 bn
- USDT's overcollateralization margin, according to S&P (via Cointelegraph)
- 3.9%
What S&P measures when it rates a stablecoin
S&P does not give USDT a credit rating like that of a company or a country. It publishes a stablecoin stability assessment, which estimates the asset's ability to hold its US$ 1 value over time. The scale runs from 1 ("very strong") to 5 ("weak"). The criteria weigh the quality and liquidity of the reserves, governance, the regulatory environment and the issuer's transparency.
USDT's first assessment came out in December 2023, with a 4 ("constrained"). In two years, the agency concluded that the risk profile of the reserves had worsened. The full history of USDT's backing is in What USDT is and how its backing works.
The reasons for the downgrade
Press reports on the S&P document converge on two points: the increased exposure to higher-risk assets and transparency considered insufficient.
The underlying figures come from Tether's attestation for the third quarter of 2025, dated September 30: US$ 181.2 billion in assets against US$ 174.4 billion in USDT issued. There is a cushion, but it is thin relative to a portfolio that includes bitcoin. As a simple calculation, all else equal, a drop of about 70% in bitcoin would consume the 3.9% cushion. It is an arithmetic exercise, not a forecast or an S&P figure.
Market context weighed in: bitcoin was down about 30% from its early-October peak, according to InvestNews. The more the price falls, the lower the value of the asset backing the reserve.
Tether's response
Tether said it "strongly disagrees" with the report's characterization and called it misleading, according to Cointelegraph. CEO Paolo Ardoino reacted with the line "We wear your loathing with pride" and said traditional rating models led investors to investment-grade companies that later collapsed, according to Decrypt. According to InvestNews, he described Tether as an overcapitalized company with no toxic reserves.
The company also argues that S&P applies an old framework to native digital money and that the report acknowledges that USDT kept its peg and honored redemptions in periods of stress. Indeed, S&P itself admits this historical price stability. What it questions is resilience in a scenario in which risk assets fall at the same time.
| Point | S&P Global Ratings | Tether |
|---|---|---|
| Reserves | More higher-risk assets (24% versus 17%) | Reserves exceed the USDT issued, with excess capital and high profitability |
| Transparency | Audits and data on custodians and counterparties are lacking | Publishes quarterly attestations and disagrees with the reading |
| Track record | Acknowledges price stability | Says it held the peg during banking crises and honored redemptions |
| Methodology | Stability assessment criteria | "Legacy framework" that does not capture digital money |
What changes in practice for USDT users
The rating does not affect the transfer itself: USDT keeps circulating and being accepted, and in the reports consulted there was no loss of peg tied to the announcement. What changes is the risk view of those who hold a balance for longer. For a payment that leaves in reais and reaches the supplier in minutes, exposure to the backing is short. For those who hold USDT for weeks, it is greater.
Anyone paying a supplier should avoid keeping an idle USDT balance without need, agree with the supplier on the time frame for converting the amount received and follow Tether's quarterly attestation. Virtual assets are not covered by the FGC (Brazil's deposit guarantee fund) and USDT can lose its peg.
The downgrade also feeds into the regulatory debate. Tether moved its headquarters to El Salvador and is overseen by a local regulator, a point S&P cites (understand the move). In Brazil, the rules published by the Central Bank of Brazil (BCB) on November 10 will treat international payment with stablecoin as a foreign exchange transaction starting February 2, 2026, which requires identifying the beneficiary and keeping documentation (Resolution 521 in detail).
What to watch going forward
- Tether's next quarterly attestation and the composition of the reserves, especially the share of bitcoin and gold.
- Whether Tether begins to publish a full audit by a major firm, a point S&P presses.
- The price of bitcoin, which directly affects the value of the higher-risk backing.
- Regulation in the United States and Europe, which pressures Tether to adapt its reserve model.
Frequently asked questions
What does S&P's 5 "weak" rating mean for USDT?
It is the last step on S&P's stablecoin stability assessment scale, which runs from 1 ("very strong") to 5 ("weak"). It indicates that, in the agency's view, the ability to hold the peg to the dollar in an adverse scenario is low. It does not mean that USDT has lost its value.
Did USDT lose its peg to the dollar after the downgrade?
In the press reports consulted through November 28, 2025, the announcement was not accompanied by a loss of peg. S&P acknowledges that USDT has maintained remarkable price stability in periods of volatility.
Why did S&P downgrade USDT?
The agency pointed to the increase in higher-risk assets in the reserves (bitcoin, gold, secured loans and corporate bonds), from 17% to 24% in a year, and the lack of audits and of information on custodians and counterparties.
What did Tether respond?
Tether said it strongly disagrees with the report, that it applies an old framework to a digital asset, and that USDT kept its peg and honored redemptions. CEO Paolo Ardoino also criticized the agency publicly.
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Sources
- Tether Stablecoin Stability Rating Reduced to 'Weak' at S&P · Bloomberg, Nov 26, 2025
- S&P Downgrades Tether's USDT Stability to 'Weak' Due to Bitcoin Backing Concerns · Decrypt, Nov 26, 2025
- S&P downgrades USDT, questions its ability to maintain peg · Cointelegraph, Nov 26, 2025
- Fantasma das reservas assombra stablecoin USDT após rebaixamento da S&P · InvestNews, Nov 27, 2025
- Stablecoin Stability Assessment: Tether (USDT) · S&P Global Ratings, Dec 12, 2023
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