What Is Tether (USDT)? The Most Popular Stablecoin Explained

Tether (USDT) is the world’s most-used stablecoin—a crypto asset designed to track the price of the U.S. dollar. Whether you are a trader moving funds between exchanges, a DeFi participant seeking a stable unit of account, or someone sending money across borders, USDT often acts as the settlement layer of choice. This guide explains how USDT works, why it’s so widely used, the risks to understand, and practical tips for holding and moving it safely.

What makes USDT a “stablecoin”?

A stablecoin aims to maintain a 1:1 value with a reference asset—typically USD—through a combination of reserves and issuance controls. USDT is issued by Tether Limited. When verified customers deposit dollars (or equivalent), Tether mints USDT; when they redeem, Tether burns USDT. The issuer’s reserves are intended to fully back circulating tokens so that one USDT can be redeemed for approximately one dollar. Tether publishes reserve breakdowns and quarterly attestations on its Transparency page, including reports by an independent accounting firm, currently BDO Italia. You can review reserve composition, liabilities, and recent attestations on Tether’s official Transparency dashboard (see Tether’s Transparency page).

• Read: Tether’s reserve disclosures and attestations on the Transparency page at Tether.

How USDT works on multiple blockchains

USDT is available on many networks, including Ethereum (ERC-20), Tron (TRC-20), BNB Chain, Polygon, Arbitrum, Optimism, Solana, and TON. There is no single “USDT”—each network has its own contract and token supply. Choosing where to hold or transfer USDT affects speed, fees, and ecosystem access. Always verify the official contract addresses and supported chains on the issuer’s page before depositing or withdrawing stablecoins across platforms (see Tether Tokens and supported networks).

• Reference: Official list of chains and contract addresses at Tether Tokens.

Why USDT is so popular

• Liquidity and market coverage: USDT is widely listed across centralized and decentralized exchanges. This broad market presence allows near-instant settlement between platforms and deep liquidity in trading pairs. For live market cap and liquidity data, refer to the USDT page on CoinMarketCap.

• Speed and low cost on certain chains: On high-throughput networks like Tron, fees can be minimal and confirmations fast, which is appealing for exchanges, market makers, and remittances.

• Ubiquity in DeFi: Many DeFi protocols accept USDT as collateral, liquidity, or a base trading asset. The breadth of integrations increases its utility.

• Cross-border settlements: For users in regions with limited access to banking rails, USDT can serve as a dollar proxy, offering rapid transfers compared with traditional remittance channels.

Transparency, attestations, and oversight

Tether provides periodic reserve attestations, a breakdown of holdings, and information about secured loans, treasuries, cash, and other instruments backing USDT. While attestations offer a snapshot in time performed by an external accounting firm, they are not the same as a full financial audit. Users should understand this distinction and review disclosures directly from the issuer (see Tether Transparency).

USDT’s history also includes regulatory actions. In 2021, the U.S. Commodity Futures Trading Commission settled charges alleging that Tether misrepresented reserve composition in earlier years; Tether agreed to pay a civil monetary penalty as part of that settlement. You can read the official disposition on the CFTC website (see CFTC Press Release on Tether).

• Reference: Tether’s Transparency page for current reserve information.
• Reference: CFTC’s 2021 order and press release regarding Tether.

Risks to consider

• Issuer and counterparty risk: USDT’s peg depends on Tether’s ability to manage reserves and process redemptions. If reserve quality deteriorates or access to banking is disrupted, peg stability can be stressed.

• Regulatory change: Stablecoins are a focus for global regulators. The EU’s Markets in Crypto-Assets (MiCA) regime is rolling out tailored rules for stablecoins, including reserve, reporting, and governance requirements (see European Commission overview of MiCA). In the U.S., regulators have proposed bank-like oversight for payment stablecoin issuers (see the U.S. Treasury’s President’s Working Group Report on Stablecoins).

• Blacklisting and compliance: Centralized issuers can freeze tokens at sanctioned or illicit addresses to comply with law enforcement. This can reduce abuse but introduces censorship risk. Chainalysis’ research provides context on how stablecoins are used across legitimate and illicit flows (see Chainalysis Crypto Crime Report overview).

• Network choice and fees: USDT on Ethereum may incur higher gas fees during congestion, while other networks may be cheaper but carry different security models and ecosystem trade-offs. Check an Ethereum gas tracker if you’re timing ERC-20 transactions (see Etherscan Gas Tracker).

Latest developments to watch

• Multichain expansion: Tether continues to broaden its footprint. In 2024, USDT launched on TON, enabling fast, mobile-first transfers and expanding USDT’s retail reach (see Tether’s announcement of USDT on TON).

• Ongoing market leadership: USDT remains the most-used dollar stablecoin by trading volume and pairs. For current supply and market data, see the CoinMarketCap USDT page.

• Policy momentum: Global standard setters continue to refine stablecoin oversight to address run risk, transparency, and payment-system implications. For a policy lens on benefits and risks, see the IMF’s overview of stablecoins.

References for recent dynamics:

• Tether USDT launches on TON (Tether announcement)
• CoinMarketCap USDT live market data
• European Commission’s MiCA page on crypto-assets regulation
• IMF blog on stablecoins’ promise and peril

How to use USDT safely

• Verify contract addresses: Only interact with official contracts published by Tether. Double-check networks and addresses on the Tether Tokens page before bridging or depositing.

• Choose the right network for your use case: For low-cost transfers, networks like Tron or TON can be efficient. For DeFi depth, Ethereum and its major layer-2s offer a broad protocol landscape. Match your network to your needs.

• Understand exchange and wallet settings: When withdrawing from an exchange, ensure the destination wallet supports the same network standard (e.g., ERC-20 vs TRC-20). Sending to an incompatible network may result in loss of funds.

• Keep security top of mind: Use strong operational security—unique passwords, hardware-based key management, and offline signing—to mitigate phishing, malware, and other threats.

Holding USDT with a hardware wallet

If you hold material balances or plan frequent transfers, a hardware wallet can significantly reduce key-exposure risk. OneKey offers:

• Open-source software and verifiable build processes
• Multi-chain support for USDT across popular networks such as Ethereum, Tron, and major layer-2s
• Secure offline signing with human-readable transaction prompts
• Support for custom RPC endpoints and advanced fee controls

These features help USDT holders minimize attack surface while maintaining flexibility across ecosystems. When you self-custody, always back up your seed phrase securely and test small transfers before moving large amounts.

Quick checklist

• Review Tether’s latest reserves and attestations on the Transparency page.
• Confirm the exact network and contract address on Tether Tokens.
• Check live network fees (e.g., Etherscan Gas Tracker) before ERC-20 transfers.
• Evaluate regulatory and counterparty risk in your jurisdiction (see European Commission’s MiCA overview and U.S. Treasury’s PWG Report).
• Consider hardware-backed self-custody, such as OneKey, for long-term holdings.

Useful resources

• Tether Transparency: reserve composition and attestations — see Tether Transparency
• Official networks and contract addresses — see Tether Tokens
• USDT market data — see CoinMarketCap: Tether (USDT)
• CFTC settlement with Tether (2021) — see CFTC Press Release on Tether
• EU MiCA regulatory overview — see European Commission MiCA page
• U.S. PWG Stablecoin Report — see U.S. Treasury PWG Report on Stablecoins
• Stablecoin policy perspective — see IMF: Stablecoins’ Promise and Peril
• Ethereum gas fees — see Etherscan Gas Tracker
• USDT launch on TON — see Tether’s USDT on TON announcement

By understanding how USDT is issued, managed, and used across networks, you can harness its convenience while managing risk. If you opt for self-custody, a security-first setup with a hardware wallet like OneKey can help keep your USDT safe without sacrificing speed or interoperability.