Tether’s USDT, the dominant dollar-pegged stablecoin with nearly $185 billion in circulation, just took a hit from traditional finance rating powerhouse S&P Global, as it downgraded its assessment of USDT’s ability to maintain its peg from 4 to 5, which is the weakest score on its associated scale.

S&P originally rolled out its stablecoin rating framework in 2023 to gauge risks like liquidity, governance, and asset backing in the emerging sector. According to their recent report on USDT, Tether’s reserves have shifted toward more volatile holdings over the past year. These perceived riskier assets, such as bitcoin, gold, secured loans, and corporate bonds, now make up 24% of the reserve mix, up from 17% in 2024.

One of S&P’s sharpest criticisms in its downgrade of USDT lies in its grow

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