Tether Just Got S&P’s Worst Rating. It’s Also Buying Gold Like a Central Bank.

📊 Data Verified: 15:40 UK, 27 November 2025 | S&P Rating: Bloomberg/CoinDesk 26 Nov | Gold Holdings: Jefferies via FT 25 Nov | Reserves: Tether Q3 Attestation 31 Oct | Price: CoinGecko 15:40

At a Glance

S&P downgraded Tether to its weakest stability rating the same week Jefferies revealed the company bought more gold than any single central bank in Q3. Two frameworks. Same data. Opposite conclusions.

Read paths: 2 min (this box) | 5 min (bold + blockquotes) | 12 min (full brief)

The Setup

Tether processes more daily volume than Visa on some networks. It holds more US Treasuries than South Korea. It generated $10 billion in profit through Q3 2025, outpacing Bank of America.

S&P just rated it the same as a stablecoin that needed an emergency bailout.

The same week, investment bank Jefferies revealed Tether bought 26 tonnes of gold in Q3 alone. More than any single central bank tracked by Jefferies that quarter. One institution calls that a risk. The other calls it a fortress. Both are looking at the same reserve data.

This brief isn’t about whether S&P or Tether is “right.” It’s about understanding why two completely different frameworks can examine identical evidence and reach opposite conclusions, and what that divergence reveals about the structural fault lines in how we define financial risk.

Act I: The Noise

If you followed crypto news this week, you’d think Tether was on the verge of collapse.

The headlines wrote themselves: “S&P Downgrades USDT to Weakest Rating.” “Tether’s Reserves Can’t Absorb Bitcoin Drop.” “Stablecoin Giant Faces Scrutiny Over High-Risk Assets.” Comparisons to TrueUSD proliferated. That’s the stablecoin that required Justin Sun to inject emergency liquidity after $456 million of its reserves got stuck in illiquid investments and a Dubai court froze the assets.

The core concern is legitimate on its face. According to S&P’s assessment published Wednesday, Bitcoin now represents 5.6% of USDT in circulation, exceeding the 3.9% overcollateralisation margin implied by Tether’s Q3 attestation. High-risk assets (including Bitcoin, gold, secured loans, and corporate bonds) climbed to 24% of reserves, up from 17% a year ago. The agency flagged ongoing disclosure gaps around custodians, counterparties, and asset composition.

The TrueUSD comparison carries weight. That stablecoin also had attestations and claimed full backing. Then $456 million of its reserves became inaccessible and required an emergency bailout. S&P is now saying Tether’s structural profile resembles that company more than it resembles Circle.

For comparison: Circle’s USDC holds an S&P rating of 2 (“strong”). Tether now sits at 5 (“weak”). That’s the full width of the scale.

Act II: The Debunk

There was one problem with this narrative.

USDT is trading at $1.00. It has maintained its peg through banking crises, exchange collapses, and the complete implosion of competitor stablecoins. During the 2022 Terra collapse, Tether processed $7 billion in redemptions within 48 hours without breaking stride.

The numbers supporting the “crisis” narrative require context:

The Bitcoin exposure concern. Yes, Bitcoin represents 5.6% of USDT in circulation, exceeding the 3.9% buffer. But this assumes a simultaneous scenario where Bitcoin crashes significantly while Tether faces mass redemptions and its other reserves lose value concurrently. The company has navigated precisely this scenario before. During FTX’s collapse, when Bitcoin fell 25% in days, Tether operated without incident.

The “high-risk assets” framing. S&P classifies gold as a “high-risk” asset. This is technically correct within their framework: gold is volatile relative to Treasury bills. But describing the world’s oldest store of value as “high-risk” while $6.8 billion sits in excess reserves reveals the limitations of any single risk model.

The TrueUSD comparison. TrueUSD’s problem wasn’t that it held volatile assets. Its problem was that $456 million of its reserves were secretly diverted into illiquid investments and a Dubai court froze the assets. The issuer was literally unable to access its reserves. Tether’s attestation, reviewed by BDO Italy, shows $181.2 billion in reserves against $174.4 billion in liabilities, with $135 billion of that in US Treasuries, the most liquid assets on Earth.

The transparency critique. S&P flags “limited disclosure” on custodians and counterparties. This is fair. Tether’s attestations are less granular than Circle’s. But “limited transparency” and “insolvent” are different claims. Tether publishes quarterly attestations reviewed by a global accounting firm. It has never refused a redemption. The company is not perfect, but it is not TrueUSD.

The debunk: The downgrade reflects S&P’s framework, not necessarily Tether’s financial condition. A “weak” rating means S&P believes USDT could struggle to hold its peg in a crisis, not that it is struggling or will struggle.

Act III: The Pivot

Here’s where the story fractures into something genuinely strange.

Days before S&P’s downgrade, investment bank Jefferies published a report identifying Tether as a major driver behind gold’s 50%+ rally this year. Their analysis: Tether now controls at least 116 tonnes of physical gold, more than the reserves of countries like Greece, Qatar, or Australia, placing it among the world’s largest non-sovereign holders.

The pace of accumulation is remarkable. According to Jefferies analysis reported by the Financial Times, Tether added roughly 26 tonnes in Q3 alone. More than any single central bank tracked that quarter, equivalent to about 2% of total global gold demand and approximately 12% of all central bank purchases. Jefferies calculated that if Tether deploys half its projected $15 billion 2025 profit into bullion, it could add nearly 60 tonnes annually going forward.

The company isn’t simply buying gold. It’s building an entire precious-metals arm. It has invested over $300 million in mining royalty companies this year and recently hired two senior metals traders from HSBC. This isn’t an allocation. It’s industrial-scale accumulation at sovereign levels.

The pivot: S&P downgraded Tether partly because gold and Bitcoin represent “high-risk” assets with volatility exposure. Tether is accumulating gold specifically because they view it as the ultimate hedge against the fiat system S&P’s models are built to evaluate.

Two institutions examining identical reserve data. Reaching opposite conclusions about what constitutes risk.

S&P sees a stablecoin dangerously exposed to volatile assets that could crater during a market crash, leaving USDT undercollateralised. Tether sees itself as a “borderless central bank” accumulating hard assets at sovereign scale while traditional finance prints its way into irrelevance.

Both frameworks are internally coherent. They’re just measuring different things.

The Ardoino Response

Tether CEO Paolo Ardoino didn’t mince words. His response wasn’t defensive. It was an attack on the entire premise of legacy risk modelling.

His statement on X was a direct shot at the rating agency model itself: “The classical rating models built for legacy financial institutions historically led private and institutional investors to invest their wealth into companies that, despite being attributed investment grade ratings, collapsed, pushing worldwide regulators to challenge such models, the independence and objective assessment of all major rating agencies.”

The 2008 reference isn’t subtle. Ardoino’s implication is clear: S&P rated Lehman Brothers investment grade before its collapse, and Moody’s blessed the mortgage-backed securities at the heart of the financial crisis. This is a direct challenge to the agency’s credibility. His argument: these agencies failed catastrophically once before, and their frameworks weren’t built to evaluate companies like Tether.

He continued: “The traditional finance propaganda machine is growing worried when any company tries to defy the force of gravity of the broken financial system. Tether instead built the first overcapitalised company in the financial industry, with no toxic reserves. And yet is and remains extremely profitable.”

The numbers support at least part of that claim. Tether generated $10 billion in profit through the first three quarters of 2025, more than Bank of America ($8.9 billion) and approaching Goldman Sachs ($12.56 billion). It holds $135 billion in US Treasuries, making it one of the largest sovereign debt holders on Earth. Its reserves total $181 billion backing approximately $174 billion in circulating USDT.

Ardoino’s position is essentially: judge us by our track record, not your models. Tether has never refused a redemption. USDT has maintained its peg through banking crises, exchange collapses, and the complete implosion of competitor stablecoins. Whatever S&P’s framework says, the market keeps voting with its feet.

Act IV: The Signal

We’re watching a $185 billion experiment play out in real time.

S&P’s framework exists for reasons that aren’t stupid. Undercollateralisation is a real risk. Transparency gaps matter. The history of finance is littered with entities that looked profitable right until they weren’t. Rating agencies, for all their 2008 failures, do serve a function in identifying structural vulnerabilities before they metastasise.

But Ardoino’s critique isn’t empty rhetoric either. These frameworks were built for a different world, one where “safe” meant government bonds and “risky” meant anything else. Tether is operating on a thesis that the traditional definitions of safety are themselves breaking down. That holding 116 tonnes of gold and $135 billion in Treasuries while generating $10 billion in annual profit represents a different kind of resilience than S&P knows how to measure.

What this means for holders:

The question for USDT holders isn’t “should I panic?” It’s “am I comfortable with a stablecoin that TradFi considers structurally weaker than alternatives?”

For many, Tether’s track record and profitability are answer enough. The company has processed trillions in volume, never missed a redemption, and prints money faster than most hedge funds. Actions speak louder than ratings.

For others, the S&P assessment will carry weight. If institutional adoption of stablecoins accelerates (and all signs suggest it will), the gap between USDC’s “strong” rating and Tether’s “weak” rating could influence which rails serious money flows through. Regulated entities may find it increasingly difficult to justify exposure to assets that carry S&P’s lowest stability rating, regardless of track record.

The framework clash:

One framework measures risk against 20th-century definitions of safety. The other is betting those definitions are breaking down in real time.

The market will eventually render a verdict. Either Tether will continue processing trillions annually while accumulating hard assets at nation-state scale, proving that crypto-native models can operate outside traditional risk frameworks. Or a black swan will arrive, the reserve buffer will prove insufficient, and the TrueUSD comparison will look prophetic rather than provocative.

The signal: This isn’t a story about a ratings downgrade. It’s a story about two completely incompatible theories of what “backed” actually means, and $185 billion sitting at the intersection while they argue past each other.

Observable Patterns

Pattern: TradFi ratings vs. market behaviour

Historically, there’s limited correlation between S&P stablecoin ratings and subsequent performance. USDT has carried S&P’s criticism for years while maintaining its peg and market dominance. The ratings reflect structural concerns, not imminent failure predictions.

Pattern: Gold accumulation at scale

Tether’s gold strategy resembles central bank behaviour more than corporate treasury management. The hiring of HSBC metals traders and investments in mining royalties suggest a long-term hard-asset thesis, not a temporary allocation. This positions the company for scenarios where traditional dollar-denominated assets underperform. Precisely the scenarios S&P’s framework struggles to model.

Pattern: Regulatory divergence

The gap between USDC’s S&P rating and Tether’s rating may widen as US stablecoin legislation matures. The GENIUS Act’s requirements around reserve composition could create a bifurcated market: regulated, US-compliant stablecoins for institutional use, and offshore alternatives for markets that prioritise liquidity and accessibility over regulatory alignment.

Week Ahead

Ongoing: USDT redemption flows will be the most important data point. Any significant uptick in redemptions would validate S&P’s concerns; continued stable or growing circulation would undermine them. Tether’s transparency page updates daily.

Regulatory watch: The GENIUS Act’s progress through Congress will shape stablecoin regulation for years to come. Tether’s El Salvador domicile and reserve composition may create friction with US compliance requirements.

Key Levels to Watch

USDT peg: $1.00 ± 0.001 is normal variance. Sustained trading below $0.995 would signal stress. We’re nowhere near that level.

Redemption velocity: Tether processed $7B in 48 hours during the 2022 Terra collapse without incident. Any redemption surge approaching that magnitude would be the real test of S&P’s thesis.

Gold accumulation: Jefferies estimates Tether may target 100 additional tonnes in 2025. Continued buying at this pace would further entrench the “borderless central bank” positioning, and further diverge from S&P’s risk framework.

One story trended. The other will matter.

The trending story: S&P downgraded Tether to its weakest rating. The story that will matter: two completely different theories of financial risk are now operating in parallel, and the world’s largest stablecoin sits at the collision point.

Tether wears S&P’s assessment “with pride.” S&P maintains its framework is grounded in structural reality. And $185 billion sits in the balance while both frameworks claim to be measuring the same thing, and reaching opposite conclusions about what they see.

Pierce & Pierce Research provides institutional-grade cryptocurrency analysis for retail investors. This is market commentary, not financial advice. Pattern recognition, not prediction.

Sources: S&P Global Ratings via Bloomberg | Jefferies via Financial Times | Tether Q3 2025 Attestation (BDO Italy) | CoinDesk | The Block | CoinGecko