‘We wear your loathing with pride:’ Why S&P downgraded Tether after it bought more gold than any country

S&P Global downgraded Tether's USDT stablecoin rating to the lowest score (5) due to concerns over reserve liquidity, citing increasing allocations to Bitcoin and secured loans, which introduce price volatility and counterparty risk outside the traditional dollar-denominated model. While Tether has aggressively accumulated physical gold, S&P noted that hard assets like gold are less easily liquidated for instant redemptions than Treasury bills. S&P also criticized the lack of public disclosure regarding asset eligibility, custodians, and counterparties, limiting confidence despite Tether holding over $130 billion in US Treasuries.

Tether CEO Paolo Ardoino defended the strategy, viewing gold and Bitcoin as long-term hedges against global instability, stating they "wear your loathing with pride" against the "broken financial system." The crypto market largely disregards the downgrade, trusting USDT's decade-long track record of maintaining its dollar peg and its deep trading liquidity. Furthermore, Tether's substantial earnings from its $130 billion in short-term US bills create a large equity cushion that the market believes can absorb volatility from riskier assets.

Ultimately, while Tether's profitability and market trust remain high, the core unresolved issue remains the lack of transparency regarding the operational details of its reserves, which S&P argues prevents alignment with expected standards for a global settlement asset.

(Source：CryptoSlate)