S&P Global Ratings announced on November 26, 2025, that it has downgraded the stability rating of Tether (USDT) from "4" (Restricted) to "5" (Weak), the lowest level on its scale. This decision sent shockwaves through the cryptocurrency market, as USDT remains the world’s largest stablecoin with a market capitalization of $185 billion.
S&P cited Tether’s increasing exposure to high-risk assets—including Bitcoin, gold, loans, and corporate bonds—as the main reason for the downgrade.
01 Rating Downgrade: S&P’s Concerns and Rationale
S&P Global Ratings based its assessment of Tether on multiple factors, which together formed the core rationale for the downgrade.
The agency specifically highlighted that Tether backs USDT with "high-risk" assets such as BTC, gold, loans, and corporate bonds, all of which are subject to heightened volatility.
According to S&P’s report, Bitcoin accounts for 5.6% of circulating USDT, exceeding the 3.9% surplus collateral margin associated with a 103.9% collateralization rate.
This means that a decline in the value of Bitcoin or other high-risk assets could directly reduce Tether’s collateral coverage.
S&P also noted that Tether is headquartered in El Salvador and regulated by the country’s National Digital Assets Commission (CNAD), which imposes relatively loose requirements on reserve assets backing stablecoins. The lack of comprehensive audits or reserve attestation reports was also identified as a key driver behind the weak stability rating.
02 Tether’s Defiant Response
Tether responded swiftly and assertively to S&P’s downgrade.
In a statement to Cointelegraph, Tether labeled the S&P report as "misleading" and stated it "strongly opposes the characterizations presented in the report."
The company argued that the report "fails to capture the nature, scale, and macroeconomic significance of digital-native currencies, and disregards clear data demonstrating USDT’s resilience, transparency, and global utility."
Tether CEO Paolo Ardoino not only challenged the new rating but also questioned the relevance of traditional financial rating agencies.
Ardoino stated, "Classic rating models built for traditional financial institutions have historically led private and institutional investors to invest wealth in companies that, despite being awarded investment-grade ratings, ultimately collapsed."
03 Tether’s Central Bank-Like Operations
Ironically, as S&P downgraded USDT’s rating, Tether was amassing an impressive reserve of traditional assets.
According to Ardoino, Tether is now the world’s 17th largest holder of U.S. Treasury securities, with over $112 billion in short-term U.S. government bonds—surpassing most countries, including South Korea, Saudi Arabia, and Germany.
The company has also accumulated 116 tons of gold reserves, rivaling the holdings of some nations and central banks.
Tether’s accumulation of gold, U.S. government securities, and its ability to mint and redeem digital dollars has led some analysts to claim that Tether now operates in a manner similar to a central bank.
04 Stablecoin Market Landscape and USDT’s Dominance
Despite S&P’s downgrade, Tether’s dominance in the stablecoin market remains unshaken.
According to a report by Artemis in collaboration with Dragonfly and Castle Island Ventures, Tether (USDT) accounts for 90% of transaction volume in the stablecoin payments market.
The Tron network has become the preferred settlement layer, representing about 60% of transactions. After annualizing payment data from February 2025, the market size reached $72.3 billion.
These figures show that, despite the downgrade and regulatory pressures, USDT continues to hold a commanding lead in real-world usage—especially in emerging markets like Argentina and Brazil, where USDT is widely used as a dollar substitute.
05 GateToken Market Performance
On the same day as S&P’s USDT downgrade, Gate’s platform token, GateToken (GT), posted a strong rally.
As of November 27, the GT price reached 10.54 USDT, up 5.08% over 24 hours. Real-time data showed the GT/USDT pair hitting 10.84 USDT, a 1.78% increase.
Technical analysis indicates GT’s short-term trend is "strongly bullish." As long as the price remains above the 10.60 USDT support level, the bullish momentum is likely to continue.
The first resistance level is at 10.80 USDT, and a breakout could lead to a further test of 10.98 USDT.
06 Market Impact and User Strategies
S&P’s downgrade comes during a landmark year for the stablecoin market.
This year, the United States passed relevant legislation, the Trump administration positioned stablecoins as a tool to maintain dollar dominance, and the stablecoin market cap surpassed $300 billion.
Meanwhile, the U.S. GENIUS Act introduced important licensing requirements and reserve standards in 2025, though key enforcement mechanisms remain unclear.
Given the current landscape, stablecoin users should consider the following strategies:
- Diversify stablecoin holdings: Consider converting part of your USDT to other stablecoins such as USDC to spread risk.
- Monitor regulatory developments: Stay updated on changes in stablecoin regulations worldwide, especially in the U.S. and EU.
- Regularly review reserves: Pay attention to disclosures of reserve asset composition and audit reports from stablecoin issuers.
- Manage market volatility: Be prepared for increased volatility following the downgrade and implement appropriate risk management.
Outlook
The stablecoin market has entered a new phase. On one hand, traditional rating agencies like S&P are turning their attention to the crypto space and issuing warnings about its risks. On the other hand, companies like Tether are demonstrating asset accumulation capabilities that rival central banks.
Amid this transformation, regulatory frameworks are gradually taking shape—the U.S. GENIUS Act introduced new standards in 2025. Meanwhile, the market is voting with its feet—USDT accounts for 90% of payment transaction volume.
Looking ahead, the stablecoin market is set to become more transparent and regulated, which could fundamentally reshape the competitive landscape.
