S&P DOWNGRADES TETHER'S USDT STABILITY

Summary from the TLDR Crypto newsletter

S&P Global Ratings downgraded Tether's USDT stability assessment to 5, the weakest level, warning that bitcoin's 5.6% share of reserves exceeds the 3.9% reserve buffer from Q3 attestations, meaning a material BTC drawdown could leave USDT undercollateralized. Riskier assets, including bitcoin, gold, secured loans, and corporate bonds, climbed to 24% of reserves from 17% a year earlier, with S&P flagging persistent gaps in transparency around custodians, counterparties, and asset composition despite short-term treasuries comprising the majority of holdings. CEO Paolo Ardoino rejected the assessment, claiming Tether is "overcapitalized" and "extremely profitable" while criticizing legacy rating models, as the agency applies similar bitcoin-linked liquidity risk concerns. Strategy received a B-minus speculative-grade rating last month.