Tether Torched: S&P Downgrade Sparks Fiery Rejection from Crypto’s Most Profitable Firm
Concerns Over Tether’s Reserves and Bitcoin Holdings Stir Up Controversy in Financial Markets
The stablecoin market, dominated by Tether’s USDT, has long been a topic of discussion among financial experts. Despite its growth and profitability, concerns over the reserves backing its stablecoin have persisted, leading to the development of a two-word dismissal: "Tether FUD." These concerns have continued to simmer in the background even during times of market turmoil.
Tether’s USDT has maintained its peg to the U.S. dollar throughout various market conditions, including recent bear markets. The company has also made significant profits, with reported earnings exceeding $10 billion in the first nine months of 2025. This level of profitability puts Tether on par with traditional Wall Street giants such as Goldman Sachs and Morgan Stanley.
However, the latest S&P Global downgrade of Tether’s USDT rating from 4 to 5 has reignited concerns over the stablecoin’s stability. The main reasons for this downgrade include the opacity of Tether’s reporting practices combined with the fact that its reserves now comprise more than 5% bitcoin, which currently makes up around 23% of the total value.
Opinions on Tether’s Reserves and Bitcoin Holdings
Tether CEO Paolo Ardoino addressed the situation by stating that they "wear your loathing with pride." Ardoino pointed out that traditional ratings agencies have a history of failure in forecasting the stability of financial products. Instead, he emphasized that Tether is "living proof that the traditional financial system is so broken it’s becoming feared by the emperors with no clothes."
Not everyone is supportive of Tether’s stance. Known angel investor Jason Calacanis recently suggested on X that Tether should sell all its bitcoin and instead hold only U.S. treasuries while also undergoing two audits from American firms.
Calacanis drew criticism for his plan to swap Tether’s relatively small holdings of BTC, which makes up around 5% of the stablecoin’s reserves, for more U.S. Treasury bonds. Several critics noted this move would likely exacerbate the very undercollateralization issues that have sparked fears about Tether’s stability in the first place.
Calls for Transparency and Accountability
Some industry voices are calling on Tether to take steps towards greater transparency regarding its reserves and Bitcoin holdings, including undergoing independent audits. Popular financial blogger Quoth the Raven recently weighed into the debate after Calacanis’ suggestion. "I’ve only ever seen one reason why a company refuses an audit when everyone asks for one," QTR noted. "And that’s not a good reason."
Market observers are also quick to point out that the lack of full transparency and accountability in Tether’s operations can have far-reaching implications, beyond just its own stablecoin’s stability.
The Future of Stablecoins and Financial Markets
Despite these ongoing controversies surrounding Tether’s USDT, as well as other major players like Binance USD (BUSD) and Gemini dollar (G USD), industry experts indicate that demand for stablecoins is unlikely to be shaken. This persistent demand, however, raises fundamental questions about how to structure the financial architecture of future markets.
Whether or not this can serve as a catalyst for broader market change remains unclear but there’s one certain fact: the Tether FUD continues to simmer in the background even as the world grapples with its place within modern finance.
Tether Torched: S&P Downgrade Sparks Fiery Rejection from Crypto’s Most Profitable Firm
Concerns Over Tether’s Reserves and Bitcoin Holdings Stir Up Controversy in Financial Markets
The stablecoin market, dominated by Tether’s USDT, has long been a topic of discussion among financial experts. Despite its growth and profitability, concerns over the reserves backing its stablecoin have persisted, leading to the development of a two-word dismissal: "Tether FUD." These concerns have continued to simmer in the background even during times of market turmoil.
Tether’s USDT has maintained its peg to the U.S. dollar throughout various market conditions, including recent bear markets. The company has also made significant profits, with reported earnings exceeding $10 billion in the first nine months of 2025. This level of profitability puts Tether on par with traditional Wall Street giants such as Goldman Sachs and Morgan Stanley.
However, the latest S&P Global downgrade of Tether’s USDT rating from 4 to 5 has reignited concerns over the stablecoin’s stability. The main reasons for this downgrade include the opacity of Tether’s reporting practices combined with the fact that its reserves now comprise more than 5% bitcoin, which currently makes up around 23% of the total value.
Opinions on Tether’s Reserves and Bitcoin Holdings
Tether CEO Paolo Ardoino addressed the situation by stating that they "wear your loathing with pride." Ardoino pointed out that traditional ratings agencies have a history of failure in forecasting the stability of financial products. Instead, he emphasized that Tether is "living proof that the traditional financial system is so broken it’s becoming feared by the emperors with no clothes."
Not everyone is supportive of Tether’s stance. Known angel investor Jason Calacanis recently suggested on X that Tether should sell all its bitcoin and instead hold only U.S. treasuries while also undergoing two audits from American firms.
Calacanis drew criticism for his plan to swap Tether’s relatively small holdings of BTC, which makes up around 5% of the stablecoin’s reserves, for more U.S. Treasury bonds. Several critics noted this move would likely exacerbate the very undercollateralization issues that have sparked fears about Tether’s stability in the first place.
Calls for Transparency and Accountability
Some industry voices are calling on Tether to take steps towards greater transparency regarding its reserves and Bitcoin holdings, including undergoing independent audits. Popular financial blogger Quoth the Raven recently weighed into the debate after Calacanis’ suggestion. "I’ve only ever seen one reason why a company refuses an audit when everyone asks for one," QTR noted. "And that’s not a good reason."
Market observers are also quick to point out that the lack of full transparency and accountability in Tether’s operations can have far-reaching implications, beyond just its own stablecoin’s stability.
The Future of Stablecoins and Financial Markets
Despite these ongoing controversies surrounding Tether’s USDT, as well as other major players like Binance USD (BUSD) and Gemini dollar (G USD), industry experts indicate that demand for stablecoins is unlikely to be shaken. This persistent demand, however, raises fundamental questions about how to structure the financial architecture of future markets.
Whether or not this can serve as a catalyst for broader market change remains unclear but there’s one certain fact: the Tether FUD continues to simmer in the background even as the world grapples with its place within modern finance.