American credit rating agency S&P Global continues to make surprising decisions.
On Wednesday, S&P Global downgraded Tether, the world’s largest stablecoin, citing the increase in high-risk assets in its reserves and ongoing gaps in its disclosures.
In a report, S&P downgraded Tether’s stablecoin stability assessment to the lowest level, level 5, “vulnerable – weak,” from the previous “4 – constrained.”
Tether objected, saying S&P Global “does not understand the nature of digital native currency, USDT.”
S&P Global cited the high presence and growth of high-risk assets, including Bitcoin (BTC), in Tether’s reserves as a reason for the downgrade.
At this point, S&P Global stated that a decline in the price of Bitcoin, in particular, could increase Tether’s collateral shortfall risk and volatility.
“There are many risky assets in reserves. Bitcoin’s share in reserves has increased. A sudden drop could lead to a collateral shortage.”
“S&P applied an existing framework that does not reflect the nature, scale, and macroeconomic significance of digital native currency, and ignored data that clearly demonstrates the durability, transparency, and global utility of USDT,” a Tether spokesperson said in a statement.
The Tether spokesperson also emphasized that it has consistently maintained its strong resilience amid banking crises, liquidity shocks, and extreme market volatility.
Tether CEO Paolo Ardoino also stated on social media that the S&P report reflected the traditional financial world’s unease with Tether. “The independence and objectivity of these rating agencies are now being questioned,” Ardoino added.
As you may recall, at the end of October, S&P Global gave Strategy (formerly MicroStrategy), the largest institutional investor in Bitcoin (BTC), a B- rating, meaning junk. This rating places Strategy in the “high risk” category. The agency cited the company’s heavy reliance on Bitcoin, its weak capital structure relative to its risk profile, and its fragile US dollar liquidity as the basis for its rating.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/us-giant-institution-turns-arrows-to-tether-usdt-after-corporate-bull-startegy-the-reason-is-bitcoin-btc/
