jakiro
Author: Clow
Tether (USDT), with a market capitalization of US$184 billion, is the cornerstone of liquidity in the crypto market, with daily trading volume often exceeding that of Bitcoin and Ethereum combined.But this digital dollar empire is encountering an unprecedented triple crisis.
Fourth quarter of 2025,Standard & Poor’s downgrades rating to ‘weak’; Founder of BitMEXArthur Hayes warningA 30% drop in gold and Bitcoin holdings will lead to bankruptcy;United Nations and Consumer OrganizationsAllegations that USDT has become the tool of choice for fraud, money laundering networks and sanctioned entities in Southeast Asia.
Is Tether an impenetrable fortress or a crumbling giant?
S&P gives death sentence
In November 2025, S&P cut Tether’s rating from “4 (restricted)” to “5 (weak)” – the lowest score in the rating system.
For institutional investors subject to strict compliance restrictions, holding assets with a “weak” rating is tantamount to boardroom suicide.
S&P reasons directly:Tether is crazy about adding high-risk assets.
Data doesn’t lie.According to the assurance report for the third quarter of 2025,The proportion of high-risk assets soared from 17% to 24%.For every $100 USDT, $24 is bet on Bitcoin, gold, mystery loans, and “other investments”:
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Bitcoin:$9.85 billion
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Gold and other precious metals:$12.9 billion
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secured loan:$14.6 billion
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Other investments:US$3.9 billion
Key data:Tether’s equity buffer is approximately $6.8 billion, while Bitcoin holdings exceed this figure.
“If the price of Bitcoin drops significantly, combined with the depreciation of other high-risk assets, Tether reserve coverage will fall below 100%“, S&P wrote unceremoniously.
By way of comparison, Circle (USDC) receives a “Strong” rating because it is almost entirely backed by U.S. Treasuries and bank deposits.
Tether is more like an aggressive macro hedge fund. While earning interest on U.S. debt, it invests profits in Bitcoin and gold, betting on the long-term depreciation of the U.S. dollar.
Tether CEO Paolo Ardoino responded harshly:“We proudly accept your disgust(We wear your loathing with pride)”.
He is confident:Tether holds more than $100 billion in U.S. Treasury bonds, with an annualized return of 4-5%, making billions of dollars every year while lying down.Which traditional bank does not operate with high leverage?Tether is fully reserved after all.
But the market will not change the rules because of stubbornness.S&P’s downgrade has put a big cross on the compliance list of institutional investors.
A trader’s doomsday game
Arthur Hayes calculated an account for Tether – it was so simple as to be cruel.
The logic is based on the elementary school formula:Equity = Total Assets – Total Liabilities
According to Tether’s third quarter 2025 data report released by accounting firm BDO:
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total assets:$181.2 billion
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total liabilities:$174.4 billion
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equity buffer:$6.8 billion
Hayes focuses on “dangerous goods” on the asset side:$22.8 billion in Bitcoin and gold.
Stress test:If it falls by 30% at the same time, Tether loses22.8 billion × 30% = US$6.84 billion, exactly clearing all share capital.
30% is not an extreme assumption.On March 12, 2020, Bitcoin plummeted by 40%, and in 2022, LUNA crashed and fell by 35%.In the crypto market, this is a likely reality.
But the counterattack came quickly.
Former Citi analyst Joseph Ayoub pointed out that Hayes missed the point:Tether has a money printing machine.
US$135 billion in U.S. debt, annualized at 4%,That means earning $450 million per month.Even if the book loss is 6.8 billion, it can be made up in 15 months.The premise is:Don’t suffer a massive run.
More importantly, Tether has $140 billion in liquid assets.Even if there is a redemption of US$50 billion (far exceeding the scale of the FTX crash), it can be dealt with by selling U.S. debt instead of selling Bitcoin at a low price.
As long as the market doesn’t plummet and run at the same time, Tether can survive.
But crises often go together.This is how Lehman collapsed in 2008:The market plummeted + liquidity dried up + counterparties refused to cooperate.
Tether is no longer a “stablecoin” but a leveraged macro hedge fund.
The original sin of tools?
In 2025, the public opinion war against Tether reached a new height.
Consumer organizations bombarded Times Square and national television networks.Accusations that Tether is “Criminals’ currency of choice“.The United Nations UNODC report reveals the role of USDT in crime in Southeast Asia.
According to Elliptic survey,The wallets related to the Cambodian “Huiwang Guarantee” platform processed more than 11 billion US dollars in transactions, most of which were USDT.This “Amazon of crime” provides one-stop services such as money laundering, fake passports, stolen accounts, etc.
The data is real and the cases exist.But the problem is:Are these accusations fair?
From another perspective, U.S. dollar cash is also the first choice for global criminal networks.Mexican drug traffickers, Colombian cartels, and Middle Eastern terrorist organizations, which one does not use U.S. dollars for transactions?But no one accused the dollar of being a “criminal tool.”
Because everyone understands:The tool itself is neutral, the key lies in the user.
Kitchen knives can cut vegetables and hurt people, but you don’t ban everyone from using kitchen knives.
USDT is also serving millions of legitimate users:
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Hedging tool:In countries with high inflation such as Argentina and Türkiye, people use USDT to protect their wealth from being swallowed up by the depreciation of their local currencies;
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Cross-border payment:Millions of freelancers and cross-border e-commerce merchants around the world use USDT to transfer money at low cost;
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market infrastructure:Support the daily transactions of tens of millions of investors around the world.
What’s even more ironic is that USDT actually plays the role of “USD Digital Ambassador” to help the US dollar expand its global influence.
Every time 1 USDT is issued, the market demand for U.S. dollar assets increases by 1 U.S. dollar.Tether holds more than $100 billion in U.S. Treasury bonds, equivalent to the size of a medium-sized country’s reserves.In a sense, Tether is an extension of the US dollar’s hegemony in the digital world.
Tether is well aware of its situation and actively cooperates with law enforcement, proactively freezing suspected criminal wallets, cooperating with TRM Labs to establish the “T3 Financial Crimes Unit”, and cooperating with the FBI and DOJ to bring several criminals to justice.
From this perspective, Tether’s efforts should be recognized rather than criticized.
The real problem is not the tool USDT, but:How to establish effective regulation without stifling innovation?How to find a balance between fighting crime and protecting legitimate users?
Washington’s Dilemma
Tether is a complex entity for the U.S. government.
On the one hand, USDT is used to circumvent sanctions, launder money, and violate national security red lines.
On the other hand, USDT expands the influence of the US dollar globally.In areas beyond the reach of the traditional U.S. banking system—from Latin America to Africa, from Southeast Asia to the Middle East—USDT becomes the “digital agent” of the U.S. dollar.
Banning Tether is tantamount to handing over demand for US dollars in these regions to competitors.
This is a dilemma.
Tether’s strategy is clear:While actively cooperating with law enforcement to prove that it is an “ally”; at the same time, it seeks geopolitical asylum, invests in El Salvador, and is deeply bound to this country that has designated Bitcoin as a legal currency.
But the final control of dollar clearing rests with Washington.If the Treasury Department OFAC places Tether on the sanctions list, any entity around the world that interacts with USDT will face secondary sanctions.
What’s even more subtle is that Tether’s more than $100 billion in U.S. debt is in custody in the hands of Wall Street broker Cantor Fitzgerald.If the government ordered a freeze, “excess reserves” would become untouchable numbers overnight.
Ironically,The more U.S. debt Tether holds, the more dependent it becomes on U.S. regulation..It thought it was buying “safe assets,” but in fact it was putting its lifeline in the hands of Washington.
Summary
Tether in 2025 is standing on the tightrope.
From a financial perspective, Tether is not currently insolvent.S&P’s downgrade and Hayes’ deduction pointed out potential risks – the asset structure is indeed fragile and risk exposure has increased.But as long as the perfect storm of “plunge + run” does not occur, the huge interest income and liquidity reserves are enough to survive the cycle.
The real uncertainty lies in Washington’s attitude.
USDT as a tool itself is neutral, just like the U.S. dollar, gold, and AI. It can be used legally or abused.The key is not banning tools, but how to supervise users.
Tether’s efforts — freezing criminal accounts, cooperating with law enforcement, and establishing compliance systems — should be recognized.But in geopolitical games, rationality often gives way to political needs.
For ordinary investors,Holding USDT is not the same as holding USD cash.It is more like a “high-yield bond” that contains Bitcoin volatility risk, credit risk, and geopolitical risk.You enjoy liquidity convenience and global accessibility, but you also bear the risk of regulatory impact.
The S&P downgrade and Hayes warning do not tell you to sell immediately, but remind you:Risk premiums have changed.
USDT remains an indispensable infrastructure for the crypto market and still provides value to millions of users around the world.But its fate depends not only on its financial statements, but also on which way the political balance in Washington ultimately tips.
Because this digital dollar empire with a market value of US$184 billion is walking a tightrope.
A gust of wind could cause it to fall.
