Tether (USDT) — the bridge between traditional finance and digital assets

Originally, Tether was created as a protective tool against sharp price fluctuations in the cryptocurrency market, primarily in trading pairs with Bitcoin and Ethereum. Its emergence became the driver for the formation of key trading pairs — BTC/USDT and ETH/USDT — which allowed traders to flexibly manage capital within the crypto ecosystem. This made it possible to move funds between assets without fixing positions in fiat and without unnecessary transaction fees.

As market capitalization increased and the ecosystem scaled, Tether’s role expanded significantly. Today, USDT is no longer perceived as an auxiliary stablecoin but as a full-fledged universal instrument that unites the banking sector with digital markets, acting as a bridge between the two worlds.

Tether’s dominance in the market

In August 2025, Tether’s market capitalization reached $167 billion, accounting for about 58% of the total stablecoin market capitalization. Over the past year, the capitalization grew by 42%, and over the last five years, it increased more than 16 times.

Tether confidently retains leadership in daily trading volumes: about $100 billion per day. These numbers significantly exceed the trading volumes of leading cryptocurrencies such as Bitcoin and Ethereum. On centralized exchanges, USDT’s share in trading pairs with other digital assets fluctuates between 60–70%, underlining its systemic importance for the entire market.

In the DeFi segment, Tether also holds a strong position, remaining one of the key assets in the ecosystems of Tron, Ethereum, Solana, and multichain protocols. Integrations with Tron, Solana, and Polygon have significantly reduced transaction costs — to less than $0.01 per transfer. This has further strengthened USDT’s position within decentralized finance infrastructure and everyday settlements.

Moreover, Tether is actively expanding into the tokenization sector of traditional financial instruments, using USDT as a settlement asset for issuing tokenized bonds and debt instruments. This opens up new opportunities for integrating stablecoins into global capital markets.

Key use cases for USDT

Experts highlight two main roles of Tether that explain its wide adoption:

• Liquidity and arbitrage. USDT serves as a tool for quickly moving capital between trading pairs and crypto exchanges. Thanks to its stable peg to the US dollar, traders use it to preserve value and engage in arbitrage strategies.
• Payment bridge. USDT simplifies the conversion of fiat into cryptocurrency and back. It is used not only for exchange operations but also for international transfers, including cross-border payments.

USDT has gained particular popularity in countries with high inflation and currency restrictions, where it effectively acts as a digital equivalent of the dollar:

• Argentina. About 50% of all cryptocurrency transactions in the country involve stablecoins. USDT is used as a digital equivalent of dollar savings and as a capital protection tool.
• Nigeria and Kenya. These countries are among the leaders in P2P operations with USDT. Micro-payments via messengers and offline wallets are widespread.
• Turkey and Egypt. Against the backdrop of national currency devaluation, USDT is used as a store of value and a settlement instrument.
• Lebanon. Amid an economic crisis, businesses actively use USDT for international settlements and transfers with foreign partners.

Regulatory challenges and reserve transparency

The long-term sustainability of any stablecoin depends on two key factors: reserve transparency and the issuer’s ability to withstand regulatory pressure. In the case of Tether, these aspects have repeatedly been the subject of criticism, raising doubts about USDT’s reliability and institutional attractiveness.

After the European regulation MiCA came into effect, EU supervisory authorities introduced a ban on providing services using USDT to companies operating within the European jurisdiction. This effectively closed Tether’s access to the European market. As a result, its competitor, USDC, gained an advantage, as Circle, the issuer, quickly adapted to the new requirements and obtained licenses to operate in the EU.

Under increasing regulatory pressure, Tether in July 2025 published its first quarterly report with a detailed breakdown of reserves. The document revealed the distribution of assets, including tokenized gold XAUT, a portfolio of short-term U.S. Treasury bonds, and deposits in leading Asian financial institutions.

However, the absence of a full audit from the “Big Four” accounting firms still limits institutional adoption of USDT. Growing oversight from regulators in the U.S. and Asia has forced Tether to partially shift operations to more favorable jurisdictions, including the UAE and Singapore.