Core Viewpoint - S&P Global has downgraded the rating of Tether's USDT stablecoin to "weak," the lowest tier in its five-level evaluation system, due to the increasing allocation of high-risk assets by Tether [1] Group 1: USDT Circulation and Reserves - As of the end of September, the circulating value of USDT was $174.4 billion, while the reported reserves were valued at $181.2 billion, resulting in a collateralization ratio decrease from 106.1% a year ago to 103.9% [3] - Only 64% of Tether's reserves are held in short-term U.S. Treasury bills, with an additional 10% in low-risk overnight reverse repos [3] - The "other assets" category, which includes Bitcoin, corporate bonds, gold, mortgages, and other unspecified assets, has increased to 24% of USDT reserves from 17% a year ago [3] Group 2: Concerns Raised by S&P - Bitcoin currently constitutes approximately 5.6% of USDT's reserve assets, exceeding the 3.9% excess collateralization rate, indicating that reserves may not fully absorb the impact of asset value declines [6] - S&P analysts expressed concerns regarding Tether's lack of audited reports, as the company only provides quarterly reserve snapshots prepared by BDO Italia without independent audits [6] - Following a restructuring last year, Tether has engaged in speculative investments in companies like Adecoagro and Rumble, with no public disclosure on how these activities are separated from its core stablecoin operations [6] Group 3: Regulatory and Operational Issues - Tether relocated to El Salvador this year and obtained a digital asset license, but the regulatory requirements in El Salvador are lower than those in Europe and the U.S., only requiring a 1:1 reserve support and that at least 70% of reserves be liquid within 30 days [6] - In response to S&P's report, Tether strongly denied the claims, stating that the report uses outdated analytical frameworks and fails to reflect the characteristics and macroeconomic importance of digital native currencies [7] - Tether emphasized that it has consistently published quarterly independent audit certification reports since 2021 and has never refused any verified user redemption requests [7]