Glossary · Stablecoins
What is USDT (Tether)?
The largest stablecoin by supply ($140B+ in 2024), issued by Tether. Less transparent than USDC about reserves; the dominant stablecoin globally because of liquidity and broader exchange/jurisdiction support.
Last updated April 30, 2026
How it works
Tether (the company) issues USDT and claims to back it 1:1 with reserves. Reserve composition (per the 2024 quarterly attestation by BDO):
- ~70%+ in US Treasury bills and overnight repos
- Smaller portions in cash, money-market funds, gold, BTC, secured loans
Critically — and historically controversially — Tether's disclosures have been less detailed and less frequent than Circle's USDC reports. They publish quarterly attestations rather than monthly audits, and the level of detail has varied.
USDT redemption is technically available (deposit USDT with Tether, receive USD wire) but with a $100k minimum and a verification process. Most retail users redeem indirectly by selling USDT for fiat on an exchange.
Example
The 2021 NYAG settlement:
- New York Attorney General investigated Tether's reserve claims in 2018-2019
- Found that during 2017–2018, USDT reserves had occasionally been less than 100% backing
- Tether settled for $18.5M without admitting fault, agreed to disclose reserves quarterly
- Has since broadened transparency but still less than US-regulated peers
USDT has held its peg through every major crypto stress event since (multiple bear markets, exchange failures, the 2022 Terra collapse), routinely facing redemption requests of billions of dollars in days. The empirical track record is solid even when the on-paper disclosure has been weaker.
Why it matters
USDT is the global default for crypto trading. Reasons:
- Liquidity. Most CEX trading pairs are quoted against USDT, not USDC. The deepest order books for BTC, ETH, and most alts globally are on USDT pairs.
- Geographic reach. USDT is widely accepted in jurisdictions where USDC isn't (Asia, Latin America, parts of Africa). A user in Argentina or Turkey is far more likely to find a P2P USDT trade than USDC.
- Older and more battle-tested. USDT launched in 2014; USDC in 2018. Many integrations only support USDT.
- Multi-chain native. On every major chain.
Trade-offs vs USDC:
| USDT | USDC | |
|---|---|---|
| Issuer | Tether (Hong Kong / BVI) | Circle (USA) |
| Disclosure cadence | Quarterly attestation | Monthly attestation |
| Disclosure depth | Less granular | More granular |
| US regulatory clarity | Limited; not FDIC; settled NYAG | Higher; registered FinCEN |
| Trading liquidity | Higher globally | Higher in US/Coinbase |
| Freeze capability | Yes, has frozen sanctioned wallets | Yes, has frozen sanctioned wallets |
For US residents, USDC is usually the right default — equivalent functionality with stronger transparency and fewer regulatory question marks. USDT becomes preferable when:
- Operating in markets where USDC liquidity is poor
- Trading on exchanges that pair primarily against USDT
- You specifically need its broader acceptance (P2P, OTC, certain DeFi)
Many active traders hold both — USDT for international liquidity, USDC for US redemption. Both have track records of holding the peg under stress; both also have demonstrated they will freeze wallets on government order.