Tether Brings USDT Back to Bitcoin in Bid to Make Blockchain More Robust

USDT is currently the largest circulating stablecoin – a digital asset that maintains a steady value by being pegged to a fiat currency – with a market capitalization of $184bn, according to DeFiLlama. 

Tether CEO Paolo Ardoino announced the move in a post on X on 7 Jul, writing that "Tether [loves] Bitcoin." 

Bitcoin infrastructure company UTEXO will lead the rollout of native USDT on Bitcoin using RGB protocol version 0.11.1. RGB is a technology that lets developers issue digital assets, such as stablecoins, on the Bitcoin network without changing the blockchain's underlying rules. It can also work with the Lightning Network – a decentralized scaling solution designed to lower costs and speed transactions on the Bitcoin blockchain.

The project has been in development for several months. In March, UTEXO revealed it had raised $7.5mn from Tether, Big Brain VC and Portal Ventures to help build the technology needed to launch USDT on Bitcoin.

Coming home

USDT was first launched on Bitcoin via the Omni Layer more than a decade ago before expanding to other blockchains, including Ethereum and Tron, which now process most USDT transactions. Tether ended support for the Omni Layer in 2023. This launch brings USDT back to the network where it first started.

More than that, the move could help make Bitcoin more useful for everyday financial activity, experts say. 

"It puts the most-used digital dollar on Bitcoin's settlement layer and pushes Bitcoin past the 'digital gold only' story toward being a home for dollars people actually move," Kevin Lehtiniitty, chief executive of stablecoin infrastructure company Borderless.xyz, told Sandmark.

Bitcoin (BTC) rose as much as 4% earlier in the day before retracing. As of 17:16 UTC, it was trading at around $64,000, up 0.3% over the previous 24 hours.

The launch, however, is unlikely to significantly increase Bitcoin transaction activity or fees because most of the transaction data stays off the blockchain, Lehtiniitty said.

"RGB moves the data and computation off-chain and plugs into Lightning, which is a far better scaling model," he said. "But Bitcoin tokens were never limited only by scalability. They were limited by adoption: wallet support, exchange listings, developer tooling, UX. RGB solves the math. It doesn't, on its own, solve the distribution."

'Sound money'

Matt Mudano, CEO and co-founder of Arch Network, a platform that enables smart contracts on Bitcoin, also said USDT alone is unlikely to lead to a meaningful increase in Bitcoin transaction activity. 

However, it could create the foundation for lending, trading and other financial services to be built directly on the network, Mudano said. "Bitcoin has already proven itself as sound money and a store of value," Mudano told Sandmark. "Its next evolution as a mature asset is proving it can power finance."

Lehtiniitty noted that the move will become more meaningful "the day you can hold USDT on RGB and reliably convert it to Naira, Pesos, or Rupees at a fair rate." 

"That's a multi-year build, not a launch-day feature," he added. 

Broader strategy

Separately on 7 Jul, Tether announced a $20mn investment in Brazilian crypto platform Mercado Bitcoin, one of Latin America's largest digital asset companies.

The investment aims to help Mercado Bitcoin expand its payments business, tokenized investment products and other blockchain-based services, Tether said.

Tether said the investment is part of its broader strategy to support companies building tokenization, stablecoin payments and more as digital assets become more widely adopted.