S&P Downgrades Tether After Bitcoin Reserve Exposure Hits 24%
S&P has downgraded stablecoin issuer Tether to its lowest-tier rating after finding that risk assets now account for about 24% of the company’s reported reserves, with Bitcoin (BTC) a material component of that exposure. The agency said the higher allocation to volatile assets increases valuation and liquidity risk, prompting the negative action against USDT.
The downgrade matters because Tether is a major liquidity provider across crypto markets; a hit to its credit assessment could pressure confidence in USDT, prompt redemptions, and increase short-term volatility for BTC and other paired assets. Market participants and regulators will likely watch reserve disclosures and on-chain flows closely for signs of stress or tighter oversight. Investors should monitor liquidity metrics and official statements from Tether as the situation develops.