S&P Global Ratings has assessed that Tether (USDT), the oldest stablecoin with a market capitalization of approximately $120 billion—more than 3.5 times that of other stablecoins—lags behind USD Coin (USDC) in terms of stability, transparency, and regulatory compliance. USDT received a stability rating of “4” (constrained), while USDC, primarily managed by the BlackRock-registered Circle Reserve Fund (CRF), benefits from transparency and regulatory advantages. As stablecoin regulatory frameworks gradually improve, USDT may face competitive pressure and risk being surpassed in market capitalization.
USDT is the largest and longest-standing stablecoin in circulation, with a market cap of around $120 billion as of October last year, far exceeding other stablecoins (approximately 3.5 times larger). S&P noted that USDT lacks sufficient disclosure regarding its reserve management institutions, risk appetite, or the credit quality of its bank accounts. Although a significant portion of its reserves consists of short-term U.S. Treasury bills and other dollar cash, USDT has a relatively high exposure to high-risk assets, potentially facing credit, market, interest rate, or foreign exchange risks. If the issuer were to go bankrupt without asset segregation measures to protect users, there could also be restrictions on primary market redemptions.
In contrast, USDC, another major stablecoin, though smaller in scale than USDT, received a stability rating of “2” (strong). S&P believes that USDC’s ability to maintain its peg to the U.S. dollar is rated “2” (strong), and its asset assessment result is “1” (very strong). This is primarily because USDC’s low-risk assets are mainly held in the CRF, registered with the U.S. Securities and Exchange Commission and managed by BlackRock.
S&P emphasized that although USDC’s market capitalization declined in 2023, its performance has gradually rebounded, reaching $40.22 billion on December 5. Its stability and liquidity are widely recognized, but changes in the cash proportion of its reserves could impact its asset rating. The CRF will continue to optimize reserve management to support the long-term stability and trust of its stablecoin.
