Tether (USDT)

Tether (USDT) is a stablecoin designed to be worth one US dollar. Launched in 2014 by Tether Limited, it is one of the most heavily traded crypto assets in the world. Because it works as a stand-in for the dollar on exchanges, traders use it to move between cryptocurrencies or to park funds when markets get choppy.

How does USDT work?

USDT is not the native coin of its own blockchain; it is a token minted on several existing networks. When a verified institutional customer sends dollars to Tether, the company issues new USDT. When a customer returns USDT, Tether burns those tokens and pays out dollars. This mint-and-redeem cycle is what keeps the market price close to $1: if USDT trades below a dollar, large players can buy it cheaply and redeem it with Tether for a profit.

Most retail users never deal with Tether directly; they buy and sell USDT on exchanges. That is why the exchange price can drift slightly away from exactly one dollar.

USDT was first issued in 2014 under the name “Realcoin” on the Omni Layer protocol, which runs on top of Bitcoin. It later spread to faster, cheaper networks such as Ethereum and TRON, and Tether has since ended support for several older chains that saw little use. The company belongs to a group that shares management and ownership with the Bitfinex exchange.

What backs USDT?

Tether says every USDT in circulation is backed by reserves. According to the company’s reports, most of those reserves are short-term US Treasury bills, with the rest in cash equivalents, gold, bitcoin and secured loans. Reserve reports are published quarterly with an attestation from an independent accounting firm, which is narrower in scope than a full audit.

Transparency has been a recurring issue. In 2021, Tether settled with the US Commodity Futures Trading Commission (CFTC) and the New York Attorney General over misleading statements about its reserves, paying fines in both cases.

Which networks is USDT issued on?

USDT exists on Ethereum (ERC-20), TRON (TRC-20), Solana and a number of other chains. Each version represents the same dollar value, but the networks are separate: USDT sent on TRON will not arrive at an Ethereum address. Always choose the same network on the sending and receiving side; our guide to choosing the right network covers this in detail. Network fees are paid in the chain’s native coin, such as ETH, TRX or SOL, not in USDT.

What is USDT used for?

• Trading pairs: most cryptocurrencies are quoted against USDT on exchanges.
• Parking funds: traders switch into USDT to step aside from volatile markets without cashing out to a bank.
• Transfers: it moves dollar value between exchanges and wallets around the clock.
• DeFi: it is widely used in lending markets and liquidity pools.

What are the risks of USDT?

USDT depends on a single company. Tether can freeze USDT held at specific addresses in response to law enforcement requests or hacks. If confidence in its reserves wavers, the price can slip below $1; during the TerraUSD collapse in May 2022, USDT briefly traded noticeably below its peg. Regulation is another factor: because Tether has not obtained authorisation under the EU’s MiCA rules, several exchanges have restricted USDT trading for European users, and the US GENIUS Act, signed into law in 2025, set new requirements for stablecoin issuers. Finally, transfers sent on the wrong network may be unrecoverable, and USDT held on an exchange carries that exchange’s custody risk.

How to read USDT market data

For a stablecoin, the chart matters less than the deviation from $1; a range of roughly $0.99 to $1.01 is normal. Market cap is effectively the amount of USDT in circulation, and growth in that figure is often read as fresh dollar liquidity entering the crypto market. Against other currencies, USDT simply tracks the dollar exchange rate, adjusted for local supply and demand on exchanges.

Official sources

• Tether: reserve and circulation information
• Tether: terms of use and redemption
• Tether: supported protocols