Tether (USDT) is a 'stablecoin' pegged 1:1 to the US dollar and one of the most widely used cryptocurrencies in the world. Unlike volatile Bitcoin, it stays near $1, acting as a 'digital dollar' for trading, transfers and parking value.
It is issued by the company Tether, which mints USDT against dollars deposited and burns it on redemption. It exists on many blockchains such as Ethereum and Tron โ USDT on Tron in particular is heavily used for transfers.
Tether is not its own blockchain but a token. It holds its $1 value on the promise that the company keeps reserves (dollars, Treasuries) equal to the USDT it issues. Minting and burning are controlled by the company, making it a 'centralized' stablecoin.
So the key to its stability is whether the reserves are truly sufficient and safe โ a transparency question that has been Tether's biggest controversy.
In July 2025 the US passed a stablecoin law, the GENIUS Act, requiring US issuers to hold reserves entirely in cash and short-term Treasuries at 1:1 and publish monthly attestations. But Tether, headquartered in El Salvador, is a foreign issuer outside that audit framework and needs a separate determination to keep serving US businesses (not granted as of May 2026).
As of Q1 2026, about 25% of Tether's roughly $190 billion in reserves sits in non-qualifying assets (around $8B in gold, $7B in Bitcoin, and secured loans). In response, Tether launched a separate US-compliant stablecoin 'USAT' in January 2026 and is pursuing USDT registration via the foreign-issuer pathway.
USDT is the base trading pair (e.g., BTC/USDT) on almost every exchange and a way to briefly move 'into dollars' during volatility. It sees heavy real-world use in emerging markets โ especially Tron-based USDT for sending dollars cheaply and quickly where banking is hard.
In DeFi it is a core asset for deposits, lending and payments.
First, reserve transparency: Tether has provided 'attestations' rather than full audits, and part of its reserves are non-qualifying assets, keeping controversy alive. Second, regulatory risk โ GENIUS Act compliance determines US access.
Third, centralization: the issuer can freeze specific addresses, and its sheer size (hundreds of billions) means trouble would ripple across the whole market. Even a stablecoin is not risk-free. Do your own research; this is not investment advice.
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