Bitcoin Forum

USDT was assigned a low score of four, meaning the largest stablecoin is constrained in its ability to maintain its peg to fiat, the rating agency says.

The ratings agency's new Stablecoin Stability Assessment rates stablecoins on a 1 to 5 scale, aiming to "evaluate a stablecoin's ability to maintain a stable value relative to a fiat currency," according to S&P. A score of 1 means a given stablecoin is "very strong," while 5 means "weak."

Tether's USDT, the most popular stablecoin, got a score of 4 (meaning "constrained"). The second-largest stablecoin, Circle Internet Financial's $24 billion USDC, got a 2 ("strong") – the best rating any stablecoin got, an assessment it shared with Gemini dollar (GUSD) and Pax Dollar (USDP).

• Credit rating agency S&P reveals new stablecoin ranking system that gives the biggest one, Tether's $90 billion USDT, a poor score.
  
• The system is designed to "evaluate a stablecoin's ability to maintain a stable value relative to a fiat currency," which is the core job of a stablecoin.

S&P Faults Biggest Stablecoin, Tether's USDT, as It Debuts New Industry Ranking (https://www.coindesk.com/policy/2023/12/13/tether-scores-second-lowest-rank-in-sp-global-stablecoin-stability-assessment/)

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One more reason to avoid using USDT further is that it's performing the worst even in the very only job of maintaining its stable value close to the dollar. I am not sure about the USDC "2" score rating because its still the same as USDT but anyway let's focus on the tether now and why we users are keep using it even though it fails to maintain its peg value of a dollar?

https://www.spglobal.com/_assets/documents/ratings/research/101590837.pdf

I don’t want to look into this because Dai has a low valuation, although the value of Dai depends on the large number of USDT in collateral.
https://app.nansen.ai/token-god-mode?tokenAddress=0x6b175474e89094c44da98b954eedeac495271d0f&chain=ethereum&tab=transactions

The circle company lobbies its interests very well. Therefore, this report should not be given much credence. But only Dai cannot be blocked by the owner of the smart contract.

By the way, you need to know that USDT is present in different blockchain networks. I wonder if the risks are also different?

I don't think being on different blockchain reduces the risk. The rating is about Tether that uses USDT ticker operating on different  blockchain. It is one of the most shady stable coin which has the third biggest marketcap. Those who are using it won't stop using it because it is available on different blockchain that is it's USP.

Presence in different blockchains doesn't change the fact that is decentralized so it can be frozen by the creator whether its sitting in your non-custodial wallet or an exchange's address. The only difference between chains is the transaction fee and all the characteristics remain same.

Concerning its familiarity in this space, although there is much information about regulations that have appeared to affect price stability, they still exist and are an indispensable part of the market. But in this space, it is difficult to guarantee that bad scenarios will not happen. I think the issue of choosing safe stablecoins for users on a small scale will not have too much of an impact, but on a large scale, that is a big risk sign.
It's unlikely that there are political issues behind why quality control and assessment are mentioned so much, but in my opinion, in a not yet completely decentralized environment, finding your own way out of this difficulty is difficult, and forcing stablecoins should probably also be researched. Honestly, from that point of view, I think the majority of people are more susceptible to flavor manipulation, and small-scale use is not too worrying.