What Is Tether (USDT)? 

In this article, we explore what the Tether stablecoin is, how it works, and how to use it in crypto trading.

Introduction to the World’s Largest Stablecoin

Tether (USDT) is the world’s largest and most traded stablecoin, designed to maintain a 1:1 peg with the US dollar. By combining the stability of fiat currency with the efficiency of blockchain, USDT has become a key pillar of the digital asset economy, enabling fast, low-cost transactions without the volatility of traditional cryptocurrencies.

What Is Tether (USDT)?

Launched in 2014, Tether is a fiat-collateralised stablecoin issued by Tether Limited. Each USDT is intended to be redeemable for one US dollar and is backed by reserves held by the issuer. USDT is available on multiple blockchains, including Ethereum (ERC-20), Tron (TRC-20), Solana, Polygon, and others.

Its primary function is to provide a stable, digital representation of the US dollar that can be used for trading, payments, remittances, and participation in decentralised finance (DeFi).

How Does Tether Work?

USDT maintains its peg through a collateralisation model:

• Users can deposit US dollars with authorised issuers and receive an equivalent amount of USDT
• USDT can be redeemed back into US dollars through the same process
• Arbitrage activity helps maintain price stability when market prices deviate from $1

USDT’s multi-chain presence means it can be sent, received, and integrated across a wide range of wallets, exchanges, and blockchain networks.

Learn more about stablecoins and how they work.

How Is Tether Backed?

Tether’s reserves are held in a mix of cash and cash equivalents, short-term US Treasuries, reverse repurchase agreements, money market funds, and other assets. According to Tether’s most recent attestation reports, over 85% of reserves are in cash and cash equivalents, with the majority in short-term US Treasuries.

Tether has gradually reduced its exposure to riskier assets like secured loans and increased transparency by publishing quarterly reserve breakdowns verified by independent auditors.

However, it has yet to complete a full independent audit.

Tether’s reports are publicly available here.

What Are Some of USDT’s Real-World Utility?

• Crypto Trading: USDT is widely used as a quote currency and settlement asset on centralised and decentralised exchanges.
• Payments and Remittances: Enables fast, low-cost cross-border transactions without traditional banking intermediaries.
• DeFi Participation: Used for lending, borrowing, yield farming, and liquidity provision.
• Merchant Acceptance: Accepted by a growing number of online businesses and payment processors.
• Humanitarian Aid: Used for relief efforts in crisis zones to bypass unstable local banking systems.

Tokenomics of USDT

• Token Type: Stablecoin
• Peg: 1 USDT = 1 USD
• Issuance Model: Minted or burned upon deposit/redemption via authorised partners
• Circulating Supply: Over 110 billion USDT (as of 2025)
• Multi-Chain Support: Available on Ethereum, Tron, Solana, Polygon, Avalanche, and more

Support for some blockchains, including Omni and EOS, are set to end in September 2025 as Tether refocuses on high-demand networks.

Benefits and Limitations of USDT

Regulatory Landscape

USDT operates in a regulatory grey zone in some jurisdictions but has taken steps to improve compliance. Tether Limited works with law enforcement on illicit activity investigations and complies with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements for direct issuance and redemption.

Global regulators are increasingly scrutinising stablecoins, with the US and EU proposing frameworks that could impose stricter reserve and reporting requirements. Despite this, USDT’s market dominance remains strong, particularly in Asia, Latin America, and emerging markets.

What Does the Future Hold for Tether?

Tether continues to expand into new markets and asset classes:

• Investing in renewable energy and infrastructure projects (Tether Energy)
• Supporting emerging market payment solutions
• Increasing allocation toward real-world assets (RWAs) such as short-term Treasuries

While regulatory pressures are likely to shape its operations, USDT’s liquidity, accessibility, and network effects position it to remain a dominant force in the stablecoin sector.

How to Buy USDT on Crypto.com

Buying USDT and other stablecoins is straightforward with the Crypto.com App. Users can use supported fiat currencies like USD, EUR, and GBP. 

Below is a step-by-step guide to getting started:

1. Download the Crypto.com App, available on the Apple App Store and Google Play. 

2. Complete the sign-up process. On-screen prompts are at hand to guide users. 

3. Funds deposited using bank transfers will usually clear within one to three business days. For faster access, users can also fund their account using Apple Pay or a prepaid/credit card. Please note that processing times and availability may vary depending on card issuer and other factors. 

4. Once the funds are cleared, users can start buying USDT, along with large-cap assets like Bitcoin (BTC) and Ethereum (ETH), plus an extensive collection of altcoins and meme coins.

Conclusion

USDT bridges the gap between traditional finance and digital assets by offering a dollar-pegged stablecoin that works seamlessly across multiple blockchains. It enables traders, businesses, and individuals to transact globally with speed and stability, while also serving as a vital liquidity source in the crypto markets.

As stablecoin adoption grows and regulatory frameworks evolve, USDT’s role in both CeFi and DeFi is likely to remain central, provided it continues to maintain transparency and adaptability.

When considering including Tether in a crypto portfolio, it is important to carefully evaluate the risks and benefits based on individual goals and risk tolerance.

Due Diligence and Do Your Own Research

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Although the term ‘stablecoin’ is commonly used, there is no guarantee that the asset will maintain a stable value in relation to the value of the reference asset when traded on secondary markets or that the reserve of assets, if there is one, will be adequate to satisfy all redemptions.

Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgment, as any purchases shall be your sole responsibility.