S&P World Scores downgraded Tether’s USDT stablecoin stability rating from constrained to weak, citing elevated publicity to risky property like Bitcoin. This transfer triggered intense debate on Chinese language social media, with merchants expressing issues starting from skepticism to outright panic.
The timing is essential for China’s underground crypto market. Over 20 million contributors rely on USDT as their major path to digital asset buying and selling, even after the nation’s 2021 ban.
S&P Flags Reserve Composition Considerations
The official S&P World report launched on Wednesday highlights important dangers in Tether’s reserve construction. Bitcoin now makes up 5.6% of circulating USDT, exceeding the beforehand acknowledged buffer of three.9%. S&P pointed to inadequate transparency and restricted disclosure of reserve property.
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Based on Tether’s Q1–Q3 2025 attestation studies, the corporate holds $9.9 billion in Bitcoin and $12.9 billion in gold. Mixed, these risky property account for about 13% of complete reserves backing $174.4 billion in liabilities. Tether maintains $181.2 billion in reserves and has generated over $10 billion in revenue within the first three quarters of 2025.
S&P’s evaluation additionally highlighted publicity to high-risk property, resembling secured loans, company bonds, and treasured metals. The company famous ongoing gaps in disclosure practices, elevating doubts about USDT’s long-term potential to maintain its 1-to-1 peg with the US greenback. Nevertheless, Tether’s transparency studies present US Treasury holdings of greater than $113 billion, accounting for many of its reserves.
Chinese language Merchants React With Combined Feelings
Different contributors expressed concern in regards to the potential fallout. The nervousness facilities round USDT’s key position as very important infrastructure for China’s thriving however banned stablecoin crypto neighborhood. Many exchanges serving Chinese language customers function below native administration, creating deep ties between merchants and USDT-denominated markets.
“If this bomb goes off, the cryptocurrency market is completely finished!” Supply: Weibo
In the meantime, conspiracy theories emerged about coordinated assaults by stablecoin rivals USDC and USD1. Some analysts argued that these opponents have a lot to achieve from undermining USDT’s dominance, notably as world regulatory scrutiny intensifies. Critics took the chance to advertise USDC as the way forward for stablecoins, citing stronger transparency and regulatory compliance.
Underground Market Faces Stability Take a look at
China started complete cryptocurrency bans in 2017, culminating in 2021 with the outlawing of all crypto transactions and mining. But, information exhibits greater than 20 million Chinese language residents maintain Bitcoin as of 2024. Merchants use abroad exchanges, over-the-counter platforms, and personal offers to bypass native restrictions.
USDT emerged as a lifeline for this shadow market, enabling Chinese language traders to transform yuan into dollar-linked tokens via casual channels. Social media websites like Weibo and WeChat present steady curiosity in Bitcoin and crypto buying and selling, with speedy development in some change communities. This community depends on influencers and so-called “signal teachers” to information customers via regulatory boundaries.
This exercise’s scale explains why the S&P downgrade resonated so strongly in Chinese language crypto communities. Any disruption to USDT might set off a sequence response throughout an ecosystem with no official recourse. Merchants face increased dangers as a result of casual and unregulated nature of their markets.
