stablecoin

S&P Global Ratings downgraded Tether's USDT stablecoin to its lowest possible rating of "5 (weak)" on November 26, 2025, from a "4 (constrained)". The downgrade was prompted by Tether's increased holdings of high-risk assets like Bitcoin and gold, along with persistent concerns about the opacity of its reserves and disclosures. Tether's CEO, Paolo Ardoino, defiantly responded to the news with the quote, "We wear your loathing with pride".
Reasons for the S&P downgrade:
Growing exposure to high-risk assets: Over the past year, the proportion of riskier assets in Tether's reserves has risen from 17% to 24%. S&P highlighted Tether's increased holdings in Bitcoin, gold, corporate bonds, and secured loans, which add market volatility and risk.
Bitcoin exposure exceeding the buffer: As of September 30, 2025, Tether's Bitcoin holdings constituted 5.6% of its circulating supply, surpassing the 3.9% over-collateralization margin. S&P warned that a drop in Bitcoin's price could potentially lead to under-collateralization.
Persistent transparency issues: S&P reiterated its long-standing concerns regarding Tether's limited disclosure on the creditworthiness of its custodians and counterparties.
Relatively weak regulatory framework: S&P views the regulatory oversight in El Salvador, where Tether is now regulated, as having flaws, such as broad definitions for reserve assets and a lack of required asset segregation.
Tether's rebuttal:
Tether's CEO Paolo Ardoino rejected the downgrade, accusing S&P of using outdated rating models designed for the conventional financial system.
Ardoino stated that Tether is "the first overcapitalized company in the financial industry" with no "toxic reserves," and that the company's profitability and resilience prove the traditional financial system is "broken".
Tether's response also emphasized its track record of maintaining stability and fulfilling billions in redemptions, even during market crises.
The company highlighted its position as a major holder of U.S. Treasuries, arguing that this and its profitability demonstrate its financial strength.
$USDT

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There is a silent battle happening in the background of global finance. It is not about interest rates. It is not about stock markets. It is not even about central banks. It is a competition to control something far more powerful than most people realize. The future of digital dollars. Stablecoins are no longer just crypto tools. They are turning into the backbone of an entirely new global financial system. A system that is faster, cheaper, global, transparent and completely borderless.

The world is entering the stablecoin war and this time the players are very different. Traditional banks, FinTech giants, crypto issuers, tokenization platforms, onchain credit systems, and even governments are all trying to position themselves. Why. Because money is moving to the blockchain. Not the speculative part. The transactional part. The payments. The remittances. The settlement. The credit. The global transfer of value.

Stablecoins are winning this shift because they provide something the traditional banking system cannot deliver. Instant settlement, global accessibility, programmable money and transparent collateral. And in this war, USDT and USDC are no longer the only giants. A new wave of stablecoins is emerging, backed by real world assets and powered by onchain credit systems like Falcon Finance’s USDf, Ethena’s USDe, Maker’s sDAI, and algorithm hybrid models that solve the stability problem.

For the first time ever the global stablecoin supply is rising again after months of contraction. That alone is a powerful macro signal because stablecoins represent onchain liquidity. When stablecoins grow, the crypto market grows. When stablecoins shrink, liquidity dries up. And right now the stablecoin curve is turning upward faster than most analysts expected. But the story is not only about growth. It is about competition.

USDT still dominates the market with a massive share, especially in emerging economies. It is trusted because it works, it is fast and it has liquidity everywhere. It is the dollar that people actually use in places where banks are slow or unstable. But USDC is rising again with a new regulatory framework, global bank integrations and deep institutional adoption. It focuses on compliance, transparency and corporate partnerships. These two giants represent the old phase of the stablecoin war. What comes next is something entirely different.

We are now entering the era of RWA backed stablecoins. These stablecoins are not backed by traditional bank reserves. They are backed by tokenized real world assets like treasuries, bonds, credit portfolios and yield bearing instruments. Systems like USDf and USDe are leading this shift. They turn collateral like staked ETH, tokenized treasuries or liquidity vaults into onchain dollars. This creates a new kind of stablecoin that earns organic yield, grows through real assets and improves capital efficiency. It also shifts power away from the banking system and into decentralized finance.

Falcon Finance’s USDf is one of the most interesting examples. It accepts liquid tokens and real world assets as collateral, generates overcollateralized synthetic dollars and feeds liquidity back into DeFi. This creates a universal collateral layer that supports payments, credit, liquidity and onchain leverage without needing banks. It is a stablecoin built for the multi chain economy. And it represents exactly why the stablecoin war is becoming so intense.

Ethena’s USDe is another major player. It creates synthetic dollars backed by staked ETH and hedging mechanisms. Instead of relying on physical dollars in a bank, it relies on liquidity, yield and crypto native collateral. This type of stablecoin grows through market structure rather than traditional banking. It appeals to users who want yield bearing stability without trusting centralized custodians.

Then there are tokenized real world stablecoins that reflect treasury yields. Maker is transforming DAI into a real yield instrument. These new models are winning attention because they offer what traditional dollars cannot. Yield. In a world where inflation destroys value, people want stablecoins that earn. And blockchain finally allows programmable stable yield in a transparent environment.

The stablecoin war is not only a technical battle. It is also a geopolitical shift. Emerging markets like Pakistan, India, Nigeria, Argentina, Brazil and countries in the Middle East are adopting stablecoins at a pace that is shocking global regulators. People use stablecoins as savings, salaries, remittances and business transactions. They trust stablecoins more than local currencies. This is why governments are starting to pay attention. Not because of Bitcoin. Not because of DeFi. But because stablecoins are replacing parts of their monetary system.

Central banks around the world tried to introduce CBDCs but most of them failed to get real adoption. The reason is simple. CBDCs are centralized and limited. Stablecoins are open and global. They integrate with exchanges, apps, wallets, DeFi protocols, global payment systems and smart contracts. They can move across borders instantly. They can interact with AI agents, credit systems and automated payments. They are programmable money. And this gives them an advantage that government-backed systems struggle to match.

The next phase of the stablecoin war will be defined by liquidity, transparency, yield and integrations. USDT will dominate emerging markets. USDC will dominate regulated finance. But real world asset backed stablecoins like USDf and USDe will dominate the new digital financial economy. They offer stronger capital efficiency and deeper integration with DeFi, trading, yield systems and onchain credit.

Stablecoins also represent the foundation for the agent economy and AI powered financial systems. AI agents need a currency they can use without friction. They need programmable value. They need instant settlement. They need verifiable collateral. Stablecoins are perfect for this. Whether it is KITE agents performing transactions, Injective agents executing trades, or autonomous systems managing liquidity, stablecoins are the fuel they all rely on.

Another major battleground will be payments. Traditional payment systems are slow, expensive and limited. Stablecoins are instant, global and programmable. Companies are now integrating them into payroll systems, international payments, merchant settlements and supply chains. This will create massive demand for compliant, scalable stablecoins and the networks that support them.

But the biggest shift will come when stablecoins begin replacing parts of the global bond market. When tokenized treasuries become collateral for stablecoin issuance, billions of dollars in institutional capital will flow into blockchain infrastructure. This will increase liquidity, reduce volatility and create a sustainable base for long term growth in the crypto market.

The stablecoin war will not produce one winner. It will produce categories. Just like banks and currencies coexist globally, different stablecoins will coexist across different sectors. The winners will be the ones that solve real problems. Fast settlement. Programmable value. Real collateral. Global access. Stable yield. Secure infrastructure.

And behind all of this lies the biggest truth of the digital age. Money is becoming software. Stablecoins are the code that powers that money. And blockchains are the operating systems that run it.

The next cycle of crypto will not be defined by hype. It will be defined by stablecoins that operate like financial engines. The stablecoin war has already started. The world simply has not realized how big it will become.
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