What is Tether?

Tether (USDT) is a US-dollar-pegged stablecoin issued by Tether Limited. It was launched in 2014 under the name “Realcoin” and is the oldest and largest stablecoin by circulating supply, with tens of billions of dollars worth of USDT in circulation at any given time. USDT is designed to maintain a 1:1 peg with the US dollar and is widely used as a dollar-equivalent on crypto exchanges and in cross-border payments.

How Tether works

Like other fiat-collateralized stablecoins, each USDT token in circulation is nominally backed by reserves held by Tether Limited. The composition of those reserves — cash, short-term Treasuries, commercial paper, secured loans, and other assets — has been a subject of regulatory scrutiny and periodic disclosure. Tether publishes quarterly reserve attestations, and the company has been working to expand the share of reserves held in cash and short-dated US Treasuries.

USDT is available on more blockchains than any other stablecoin, including Ethereum, Tron, Solana, Avalanche, Polygon, Arbitrum, and many others. Tron was for years the dominant network for USDT transfers, particularly for cross-border payments in Asia and Latin America, though the share of USDT on Ethereum and Layer 2 networks has grown as those networks have become cheaper.

How Tether compares to USDC

Tether and USDC are the two largest US-dollar stablecoins, and they are routinely compared:

• Liquidity — USDT has historically had deeper liquidity, especially on non-US exchanges and in non-USD trading pairs.
• Regulatory standing — USDC is generally considered to have a cleaner regulatory profile. Circle (USDC’s issuer) is a US-registered money services business with a more conservative reserve composition, while Tether Limited has faced regulatory action in multiple jurisdictions.
• Network availability — USDT is available on more networks than USDC, but USDC’s coverage of the major networks is now comprehensive.
• Use cases — USDT is more popular in Asia and in OTC/cross-border flows; USDC is more popular with US-based institutions and on Ethereum Layer 2 networks.

For everyday payments, USDC is usually the more practical choice in the US, and USDC and USDT are roughly interchangeable in Europe and most of Asia.

Tether and merchant payments

Many crypto payment processors (BitPay, NOWPayments, CoinGate) support USDT as a settlement option, alongside USDC and other stablecoins. For merchants, accepting USDT means receiving dollars without the FX volatility of holding Bitcoin or Ethereum. For users, spending USDT is generally not a taxable event in most jurisdictions, because the asset does not change in value between the time of acquisition and the time of spending.

The practical downside of accepting USDT versus USDC is the regulatory and reputational risk associated with the issuer. Some merchants prefer USDC specifically because of Circle’s cleaner regulatory standing and stronger reserve disclosures. Others accept both, letting the customer choose.