Tether's stablecoin downgraded to 'weak' in S&P assessment

By Elizabeth Howcroft

PARIS (Reuters) -S&P Global has downgraded its standing of the world's largest stablecoin, Tether,​ citing an summation successful higher-risk assets successful the cryptocurrency's ‌reserves and "persistent gaps successful disclosure", the ratings bureau said connected Wednesday.

S&P ‌in 2023 created a caller standard from 1 to 5, to measure the hazard of assorted stablecoins - a benignant of cryptocurrency pegged to mainstream currencies, usually the U.S. dollar. In a probe enactment S&P ⁠said it present rated Tether'‌s token, known arsenic USDT, arsenic "5 (weak)", which is the lowest imaginable score,‍ downgrading it from "4 (constrained)".

A spokesperson for Tether did not instantly respond to a petition for comment. Tether has antecedently said its token is the "​leading integer dollar, combining stability, transparency, and planetary accessibility."

El ‌Salvador-based Tether says it has issued astir $184 cardinal worthy of its dollar-pegged cryptocurrency, and says it holds capable reserves successful U.S. Treasuries and different assets to let token-holders to swap their Tether tokens backmost for dollars.

S&P said determination had been an summation successful high-risk assets successful Tether'⁠s reserves implicit the past year, including ​bitcoin, gold, secured loans, firm ​bonds and different investments, "all with constricted disclosures and taxable to credit, market, interest-rate, and foreign-exchange ‍risks."

"Tether continues ⁠to supply constricted accusation connected the creditworthiness of its custodians, counterparties, oregon slope relationship providers," S&P added.

Still, Tether ⁠has maintained "a notable level of terms stability" adjacent during periods of crypto marketplace ‌volatility, S&P's enactment said.

(Reporting by Elizabeth ‌Howcroft; Editing by Tommy Reggiori Wilkes)