China’s Crypto Traders Panic as S&P Downgrades Tether’s USDT

S&P Global Ratings downgraded Tether's USDT stablecoin stability score from constrained to weak, citing concerns over reserve composition, particularly its increased exposure to volatile assets like Bitcoin (5.6% of circulating USDT) and gold. The agency noted insufficient transparency and disclosure regarding high-risk assets, casting doubt on USDT's long-term 1:1 peg, despite Tether reporting over $113 billion in US Treasury holdings.

The downgrade triggered intense debate among China's estimated 20 million crypto traders, who rely heavily on USDT for trading despite the country's 2021 ban. Reactions ranged from skepticism, based on past unmaterialized warnings, to outright panic about the potential collapse of this vital infrastructure. Some traders speculated about coordinated attacks by rivals like USDC, while others promoted USDC as a more transparent alternative.

Because the Chinese crypto market operates informally without official recourse, any disruption to USDT could cause a severe chain reaction across this large, unregulated ecosystem.

(Source：BeInCrypto)