#What Does S&P's Downgrade Mean for Tether?
S&P Global Ratings recently downgraded Tether's USDT stability score to the lowest level of 5, attributing this decision to concerns around reserve risks and a lack of full transparency. This downgrade indicates a cautionary stance on the reliability of USDT in protecting against market volatility, emphasizing the exposure to risky assets like Bitcoin.
Tether has responded robustly to the agency’s evaluation, arguing that the downgrade reflects outdated perspectives that do not consider the stablecoin’s performance and relevance in the financial ecosystem. Despite the criticism, Tether emphasizes its exemplary record, noting that USDT has consistently fulfilled redemption requests, even during market crises. Furthermore, it processes billions in transactions daily across both centralized exchanges and decentralized finance (DeFi) platforms.
#How Strong Are Tether's Reserves?
The company boasts substantial reserves, highlighting a $135 billion exposure in U.S. Treasuries, making it one of the largest global holders of this asset class. Tether also reports impressive earnings, with over $13 billion in profits projected for 2024 and a significant $10 billion generated in just the current year.
Additionally, Tether underlines its critical role in emerging markets, serving not merely as a speculative asset but as financial infrastructure in countries like Türkiye and Nigeria. These markets rely on USDT for various financial transactions, showcasing its operational importance.
#What Did Tether’s CEO Say?
In response to the downgrade, Tether's CEO articulated strong discontent, challenging S&P to revise its assessments based on current data and practices instead of antiquated models. The statement highlights Tether's resilience and eagerness to confront challenges from traditional financial analysis.
Investors should carefully consider the implications of S&P’s findings while also taking into account Tether’s counterarguments regarding its operational value, financial health, and fundamental role in an evolving marketplace.