Posted 12/13/2023, 3:58:00 PM
S&P Issues Low Stability Score for Tether's USDT, Citing Lack of Regulation and Reserve Transparency
- S&P introduced a new stablecoin ranking system, giving Tether's USDT a poor score of 4 out of 5 for its ability to maintain a $1 peg
- The quality of assets backing a stablecoin is a key criteria; Tether has faced questions over its reserves though it publishes quarterly attestations
- Circle's USDC, the 2nd largest stablecoin, received S&P's highest score of 2, which it shares with Gemini dollar and Pax Dollar
- S&P sees the lack of regulation and supervision of Tether/USDT as a weakness compared to stablecoins like USDC that are regulated
- If stablecoins like USDT drift from their $1 peg, it raises concerns over their ability to serve as a bridge between crypto and fiat currencies