Key Notes

The rating agency flagged USDT's growing allocation to volatile assets including Bitcoin, which now represents 5.6% of reserves.

S&P warns that further Bitcoin price declines could push the world's largest stablecoin into undercollateralization territory.

Despite controlling 71% of the stablecoin market, Tether faces scrutiny over limited transparency and lack of robust regulation.

The world’s largest stablecoin issuer, Tether, has received a grade of “5,” the lowest possible, in an assessment from S&P analysts measuring USDT ‘s ability to stay pegged to the US dollar.

Analysts at S&P had previously rated USDT a 4, indicating “constrained” ability to remain pegged to the dollar. Its new rating of “5” drops that down to “weak.” In a Nov. 26 report detailing their decision

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