(2 December 2025 – El Salvador) S&P Global Ratings has cut Tether’s reserve assessment to weak, seen by HSBC as a firm warning that stablecoins carry an inherent de-pegging risk that does not apply to other forms of tokenized funds.
S&P reassessed the ability of Tether (USDT) to maintain its peg to the US Dollar to 5 (weak) from 4 (constrained). The negative revision reflects an increase in higher risk assets backing USDT’s reserve since its last review.
Issued in 2014, USDT is the longest-standing stablecoin with the largest volume in circulation. Tether moved from the British Virgin Islands to El Salvador in 2025 where it secured a license as a digital asset service provider and its price has remained relatively stable over an extended time period.
Tether has pointed to plans for a US based, USD backed stablecoin aimed at complying with tighter US requirements which underpins how issuers may segment products by jurisdiction and audience.
HSBC reports Circle’s USDC, which S&P rates higher than USDT, illustrates the type of positioning that could benefit if ratings and regulations become more central to stablecoin selection.
“If holders rush to redeem, a stablecoin issuer needs reserves that are unquestionably liquid and low-risk or the token’s price can splinter away from its intended peg” warned HSBC Analysts Daragh Maher and Nishu Singla.
“We wear your loathing with pride” said Tether CEO Paolo Ardoino in response to S&P releasing its updated reserve guidance.