Tether’s ability to maintain its peg to the US dollar has been called into question by S&P Global Ratings, which downgraded the stablecoin operator’s reserves to its lowest measure due to rising exposure to high-risk assets.
In a note on Wednesday, the rating agency downgraded its assessment of Tether’s assets to “weak” from “constrained”. It also flagged “an increase in high-risk assets” backing the stablecoin, with corporate bonds, precious metals, bitcoin and secured loans accounting for 24 per cent of total reserves at the end of September, up from 17 per cent a year ago.
Tether runs USDT — by far the world’s biggest stablecoin with about $184bn in circulation — a form of digital cash outside the banking system that is pegged to the dollar and mostly backed by high-quality securities such as US Treasuries.
