Tether CEO Paolo Ardoino condemned S&P Global Ratings’ downgrade of USDT’s ability to hold its U.S. dollar peg, arguing the decision misrepresents the stablecoin’s reserve quality and the company’s financial position. The rating agency cut USDT to the lowest level on its stablecoin stability scale, citing rising exposure to higher-risk assets and persistent gaps in disclosure.
S&P’s downgrade and rationale
S&P Global Ratings reduced its assessment of USDT, the world’s largest stablecoin by circulation, pointing to increased allocations to Bitcoin and gold and ongoing disclosure deficiencies. The agency warned that the stablecoin could face stress if Bitcoin prices were to sharply decline.
The move follows a period in which Tether’s public attestations have shown shifts in its reserve composition, including fewer U.S. Treasuries and greater exposure to Bitcoin and gold.
Tether’s response and reserve strategy
Ardoino rejected S&P’s assessment, portraying it as rooted in traditional finance’s misunderstanding of Tether’s model. He characterized the agency as a “propaganda machine” and said the conventional financial system is “broken,” while emphasizing Tether’s profitability and liquidity.
- Tether’s latest attestations indicate increased holdings of Bitcoin and gold alongside a reduction in Treasuries.
- Since mid-2024, the company behind roughly $100 billion in circulating USDT has invested more than $300 million in gold royalty equities, including significant stakes in Elemental Altus Royalties, Versamet Royalties, and Metalla Royalty & Streaming.
Tether’s growing exposure to alternative assets has been a focal point for critics, reviving long-running industry debates over the stability and transparency of USDT reserves—often referred to as “Tether FUD” in crypto circles.
Market context and outside commentary
BitMEX co-founder Arthur Hayes warned that Tether could face balance-sheet insolvency if the value of its Bitcoin and gold holdings drops by 30%, underscoring market concerns around asset volatility. Tether disputes that such scenarios threaten USDT’s peg, citing strong financials and liquidity management.
USDT plays a central role in global crypto markets, including in emerging economies where access to U.S. dollars can be limited. Any perceived change in its stability can have broad implications for crypto trading and liquidity.
Uruguay operations paused amid dispute
Separately, Tether has paused its Uruguay operations. A company representative confirmed the halt and reiterated long-term regional interest. Local media previously reported that Tether was exiting Bitcoin mining activities in the country following a $4.8 million debt dispute with the state-owned utility UTE. Reports also indicated layoffs after negotiations failed; Tether had invested over $100 million and committed an additional $50 million to infrastructure in Uruguay before winding down operations.
Leadership note
Ardoino, formerly Tether’s chief technology officer, was promoted to CEO in October 2023 and has led the company since December 2023, succeeding Jean-Louis van der Velde.