Tether (USDT)

The 10-second version

USDT is the biggest stablecoin by far. It’s been around since 2014, survived multiple controversies, and somehow never actually collapsed. People keep using it because it has the best liquidity for trading and is widely accepted in emerging markets.

But it’s also run by a company with a sketchy track record on transparency. If you have better options, use them.

What it actually is

USDT is a digital dollar issued by Tether Limited, a company registered in the British Virgin Islands. Like USDC, one USDT is supposed to equal one dollar. Unlike USDC, verifying that claim has historically been… complicated.

Tether says its tokens are backed by reserves including cash, cash equivalents, Treasury bonds, secured loans, and other investments. They publish quarterly attestation reports. But for years they didn’t. And the reports they do publish have been criticized for lacking detail.

In 2021, Tether paid $41 million to settle charges with the CFTC that they had made “untrue or misleading statements” about having full dollar backing. They also settled with the New York Attorney General for $18.5 million over similar issues.

Despite all this, USDT keeps chugging along. Make of that what you will.

Why people use it

Liquidity. USDT has the deepest trading pairs on most exchanges. If you’re moving serious size, you’ll often get better execution with USDT than any other stablecoin. Traders use it because the alternatives sometimes have wider spreads.

Emerging markets. In countries with unstable currencies or limited banking access, USDT has become a de facto dollar. The Tron network (cheap and fast) is particularly popular for USDT transfers in these regions.

Inertia. It’s been around longest. It’s everywhere. Sometimes people use it just because they’ve always used it.

It keeps working. Every time someone predicts Tether’s collapse, it doesn’t collapse. The graveyard of “USDT is about to implode” takes is extensive.

The catch

Tether’s transparency issues are real. The company has:

• Paid regulatory fines for misrepresenting reserves
• Operated for years without proper audits
• Had banking relationships that were, let’s say, unconventional
• A leadership team that isn’t exactly forthcoming

The reserves reportedly include things beyond cash and Treasuries. Exactly what and how much is murkier than it should be for something holding over $100 billion.

Could USDT depeg? Maybe. Would it be a mess? Yes. Is it likely? After surviving this long, probably not. But “probably not” isn’t the same as “impossible.”

If USDC is a Honda Civic, USDT is a 1995 Camry with 300,000 miles. It might run forever. It might also leave you stranded.

Our take

Use USDT when you need to, not as a default.

If you’re trading on an exchange where USDT has the best pairs, fine. If you’re sending money somewhere that only accepts USDT, fine. If you’re in emerging markets where it’s the standard, fine.

But if you’re just holding stablecoins and USDC is available, why take the extra risk? There’s no yield advantage. The liquidity difference only matters for large trades. The main reason to hold USDT over USDC is “I have to” or “I don’t care.”

We’re not predicting Tether’s collapse. Plenty of people have lost that bet. We’re just saying: if you have a choice, the regulated, transparent option is right there.

How to get it

Most exchanges have it: Binance, OKX, Bybit, Kraken, KuCoin, and basically everyone else.

Coinbase doesn’t. They only support USDC. This is probably not a coincidence (Coinbase is a USDC investor).

On-chain: Available on Ethereum, Tron, Solana, Arbitrum, BNB Chain, and many others. Tron is popular for USDT because transfers are cheap and fast.

Swapping: Any DEX will have USDT pairs. Just check which chain you’re on.