What is Tether (USDT)?

Origins: From Realcoin to Tether

Tether was created by Brock Pierce, Reeve Collins, and Craig Sellars, launching on October 6, 2014, originally under the name "Realcoin" before rebranding to Tether. The founders envisioned a cryptocurrency that combined the advantages of blockchain technology-fast transfers, global accessibility, and programmability-with the stability of traditional fiat currency.

At a time when Bitcoin's volatility made it impractical for everyday transactions, Tether offered a solution that could move at the speed of crypto while holding its value like dollars in a bank account.

Key Milestones

• • 2014: Launched as Realcoin, then renamed Tether. First stablecoin to gain significant adoption.
• • 2015: First USDT tokens issued on the Bitcoin blockchain via the Omni Layer protocol.
• • 2017: Expanded to Ethereum blockchain (ERC-20), enabling smart contract integration.
• • 2019: Launched on Tron blockchain (TRC-20), which became the most popular USDT version due to near-zero fees.
• • 2020-2021: Expanded to BSC, Solana, Avalanche, and other chains during the DeFi boom.
• • 2021: Tether settled with the New York Attorney General for $18.5 million over reserve backing claims.
• • 2023: Market cap exceeds $80 billion; Paolo Ardoino becomes CEO.
• • 2025: Market cap surpasses $130 billion, solidifying USDT as the dominant stablecoin globally.

Tether Limited and iFinex

Tether Limited operates as a subsidiary of iFinex Inc., which also owns the Bitfinex cryptocurrency exchange. This relationship has drawn scrutiny, with critics questioning the independence of reserve attestations and potential conflicts of interest. The company is based in Hong Kong with operations worldwide.

Paolo Ardoino, who became CEO in 2023, has been instrumental in expanding USDT to new blockchains and improving transparency reporting, though the company has never completed a full third-party audit of its reserves.

Reserve System

Tether claims that every USDT in circulation is backed 1:1 by reserves. These reserves include cash and cash equivalents such as US dollars and Treasury bills, as well as other investments including secured loans and, at times, Bitcoin. The company publishes quarterly attestation reports from independent accounting firms showing reserve composition.

These are attestations rather than full audits-a distinction that critics have highlighted as providing less assurance than a comprehensive audit would offer. As of 2025, Tether reports that the majority of reserves are held in US Treasury securities, which provide both safety and yield that contributes to the company's profitability.

Minting and Redemption

USDT supply adjusts based on market demand through minting and redemption. Verified institutions deposit USD with Tether and receive newly minted USDT in return. The reverse process-redeeming USDT for USD-is available only to verified institutional customers with minimum redemption amounts typically starting at $100,000, plus processing fees.

This high threshold means retail users must sell USDT on exchanges rather than redeeming directly with Tether. Unlike Bitcoin's fixed 21 million supply cap, USDT can be minted indefinitely as long as reserves back new tokens, allowing the supply to expand and contract with market demand.

Multi-Chain Architecture

USDT exists natively on multiple blockchains, each with different characteristics. Ethereum (ERC-20) offers the highest liquidity and best DeFi integration but comes with higher gas fees that can make small transfers expensive. Tron (TRC-20) has become the most popular network for USDT, handling over half of all USDT supply due to its near-zero transaction fees.

Binance Smart Chain (BEP-20) provides low fees with good DeFi support. Solana offers fast and cheap transactions for those already in that ecosystem. When choosing a network, consider your use case: Tron for low-cost transfers, Ethereum for DeFi applications, and other chains based on where you need the funds.

Important: USDT on different blockchains requires bridges to transfer between chains. Always verify the correct network when sending or receiving. Sending to the wrong network can result in permanent loss of funds.

Why USDT Doesn't Pay Interest Directly

Simply holding USDT in a wallet does not earn interest. Unlike proof-of-stake cryptocurrencies like Ethereum or Solana that pay staking rewards, USDT has no network staking mechanism. Tether Limited earns returns on the reserves backing USDT-primarily from interest on Treasury securities-but those profits are retained by the company rather than distributed to token holders.

To earn yield on USDT, you must actively deploy it through lending platforms, liquidity pools, or yield aggregators.

Centralized Platforms

Major exchanges like Binance, Kraken, and others offer earn programs where you can deposit USDT and receive interest, typically ranging from 2-8% APY depending on market conditions and lock-up terms. These platforms lend your USDT to margin traders and institutional borrowers, sharing a portion of the interest with you.

The convenience comes with counterparty risk-the collapse of platforms like Celsius, BlockFi, and Voyager in 2022-2023 demonstrated that even prominent CeFi lenders can fail, taking user deposits with them. Stick to well-capitalized exchanges and consider the trade-offs between higher yields and platform risk.

DeFi Lending Protocols

Decentralized lending protocols like Aave and Compound allow you to supply USDT and earn variable interest from borrowers. Rates fluctuate based on utilization, typically ranging from 1-8% APY. You maintain custody of your assets through smart contracts rather than trusting a centralized entity, but this introduces smart contract risk-the possibility of bugs or exploits in the protocol code. These protocols have been battle-tested over several years and audited extensively, though no DeFi protocol is completely risk-free.

Liquidity Provision

Providing liquidity to decentralized exchanges can generate higher yields than simple lending. Curve Finance specializes in stablecoin pools, offering 3-15% APY on USDT pairs with minimal impermanent loss since stablecoins maintain similar values. Uniswap and other DEXs allow USDT liquidity provision for volatile pairs, which can offer higher returns but with greater impermanent loss risk.

These strategies require more active management and understanding of DeFi mechanics, but they offer meaningful returns for those willing to learn.

1Compare providers

Select an exchange or service that operates in your country. Major options include Binance, Kraken, Coinbase, and regional exchanges. USDT is one of the most widely available cryptocurrencies, so you'll have many options to compare.

2Complete verification

Provide identification and complete KYC (Know Your Customer) requirements. This typically involves uploading a government ID and proof of address. Verification times vary by platform but usually take a few hours to a few days.

3Deposit funds and purchase

Add fiat currency via bank transfer, wire, or card. Bank transfers are usually cheaper but slower, while cards offer instant funding with slightly higher fees. Once funds arrive, purchase USDT at approximately 1:1 plus any exchange fees.

Custodial vs Self-Custody

You can keep USDT in a custodial wallet or a self-custody wallet. With a custodial wallet, an exchange or app holds the private keys for you. This is the easiest option for beginners and active traders since you only need a login, but you must trust the platform's security and solvency. With self-custody, you control the private keys in your own wallet, giving you full control but also full responsibility for backups and security.

Hardware vs Software Wallets

For self-custody, hardware wallets like Ledger and Trezor keep your keys offline, making them ideal for long-term storage of larger amounts. Software wallets like MetaMask (for Ethereum/BSC USDT), Trust Wallet (multi-chain), or TronLink (for Tron USDT) are apps on your phone or computer that offer quick access for daily use and DeFi interactions.

Many users combine both approaches: a hardware wallet for savings and a software wallet for active use, with only small amounts exposed at any time.

Choosing the Right Network

Your wallet choice depends on which blockchain your USDT is on. MetaMask works for Ethereum and BSC USDT. TronLink is purpose-built for Tron USDT. Multi-chain wallets like Trust Wallet support USDT across multiple networks. Make sure your wallet supports the specific network your USDT is on, and always double-check network selection before any transaction.

Trading and Liquidity

USDT serves as the primary trading pair on most cryptocurrency exchanges. Traders use it to exit volatile positions into a stable asset without withdrawing to fiat, which can take days and incur fees. The deep liquidity across centralized and decentralized exchanges makes USDT useful for arbitrage, market making, and quick position changes.

When you want to "sit out" market volatility, converting to USDT lets you stay in the crypto ecosystem while holding stable value.

Payments and Remittances

USDT enables fast, low-cost international transfers that settle in minutes rather than the days required by traditional wire services. On Tron, transfers cost fractions of a cent, making USDT practical for routine payments rather than just large transactions. Businesses use it for cross-border payments, freelancer compensation, and merchant settlements.

Some services allow direct conversion to local currency at the receiving end, making USDT a practical remittance corridor.

DeFi Applications

USDT is widely used in decentralized finance as collateral on lending protocols, liquidity in decentralized exchanges, and a stable base for yield strategies. Protocols like Aave, Compound, and Curve integrate USDT heavily. Its stability makes it useful for borrowing against without the liquidation risk that comes with volatile collateral.

However, some DeFi protocols prefer USDC due to its greater transparency, so check which stablecoins your target protocol supports.

Dollar-Denominated Savings

For users in countries with unstable currencies or limited access to US banking, USDT provides exposure to the dollar without needing a US bank account. This can protect savings from local currency devaluation, though it introduces the risks associated with USDT itself-reserve backing concerns, regulatory uncertainty, and the need to understand cryptocurrency storage and security practices.

Paolo Ardoino

CEO of Tether since December 2023, previously serving as CTO. Ardoino has been instrumental in expanding USDT to new blockchains and improving the company's transparency reporting. He is also CTO of Bitfinex and has been a vocal defender of Tether's operations against critics, frequently engaging on social media to address concerns about reserves and regulatory matters.

Jean-Louis van der Velde

Former CEO of Tether who stepped down in 2023 after leading the company through its period of massive growth. Van der Velde navigated the company through regulatory settlements and reserve controversies while growing USDT from a niche product to the dominant stablecoin.

Brock Pierce

Co-founder of Tether and early cryptocurrency entrepreneur. Pierce has been involved in numerous blockchain projects and was an early advocate for the stablecoin concept. He is no longer directly involved in Tether's operations but remains a significant figure in the company's history.

Giancarlo Devasini

CFO of Tether and a key figure in the company's financial operations. Devasini has been involved in managing Tether's reserves and banking relationships. His background and the company's financial management have been subjects of regulatory and journalistic scrutiny.

United States

Tether has faced regulatory action in the US, including an $18.5 million settlement with the New York Attorney General in 2021 over claims about reserve backing. The company is banned from serving New York customers directly. Federal stablecoin legislation remains under discussion, and agencies like the SEC, CFTC, and Treasury continue to evaluate how stablecoins should be regulated.

USDT remains available on US exchanges, but the regulatory environment creates uncertainty about its long-term status.

European Union

The Markets in Crypto-Assets (MiCA) regulation, taking full effect in 2024-2025, creates specific requirements for stablecoin issuers operating in the EU. These include reserve requirements, authorization from regulators, and transparency standards. Tether's compliance with MiCA requirements will determine its continued availability in EU markets.

Some European exchanges have already restricted USDT trading in anticipation of these regulations.

Asia and Emerging Markets

USDT sees heavy usage in Asia, particularly in regions with capital controls or limited banking access. Tether Limited is based in Hong Kong, though regulatory approaches vary across Asian jurisdictions. China has banned cryptocurrency trading but USDT continues to be used for capital flows.

Japan, Singapore, and other regulated markets have specific frameworks for stablecoins that may affect USDT's availability.

Compliance and Address Freezing

Tether cooperates with law enforcement and has the technical capability to freeze USDT at specific addresses. This has been used to comply with OFAC sanctions, respond to court orders, and assist in recovering stolen funds.

While this centralized control helps with regulatory compliance and fraud recovery, it also means USDT is not censorship-resistant in the way that decentralized cryptocurrencies are. Your funds can be frozen if Tether receives a valid legal request.