Tether (USDT)

Overview

Tether (ticker: USDT) is a fiat-collateralized stablecoin issued by Tether Operations Limited, a subsidiary of iFinex Inc., the same holding company that owns the Bitfinex cryptocurrency exchange. First launched in 2014 under the name "Realcoin," Tether was rebranded and became the dominant stablecoin in the digital asset ecosystem.

Each USDT token is designed to maintain a value of exactly $1.00 USD, achieved through a combination of cash, cash equivalents, and other assets held in reserve. As of early 2026, Tether's market capitalization exceeds $140 billion, making it the third-largest cryptocurrency overall — behind only Bitcoin and Ethereum — and by far the largest stablecoin.

Tether is issued and redeemed by Tether Operations Limited, with authorized users able to deposit fiat currency and receive USDT at a 1:1 ratio, or return USDT to receive dollars back. In practice, most retail participants access USDT through cryptocurrency exchanges rather than directly minting or redeeming through Tether Limited.

How Tether Works

Tether operates as a fiat-collateralized stablecoin: for every USDT in circulation, the company claims to hold an equivalent amount of value in reserve assets. Unlike algorithmic stablecoins (e.g., the defunct TerraUSD) which use on-chain mechanisms to maintain their peg, Tether relies on centralized custody of real-world assets.

On the secondary market, the peg is reinforced by arbitrage: if USDT trades at $0.99, traders buy cheap USDT and redeem for $1.00 profit; if USDT trades above $1.00, traders mint fresh USDT and sell it. This dynamic keeps the stablecoin tightly pegged under normal market conditions.

Reserve Backing

Tether publishes quarterly attestation reports (not full audits) prepared by accounting firms, disclosing its reserve composition. As of late 2025 / early 2026, the reported breakdown is approximately:

* Figures are approximate and based on Tether's published attestation reports. Independent full audits have not been completed.

Tether Gold (XAUT)

In addition to USDT, Tether issues Tether Gold (ticker: XAUT), a tokenized representation of physical gold. Each XAUT token corresponds to one troy fine ounce of gold held in a Swiss vault. XAUT allows holders to gain direct exposure to gold's price movement via blockchain, without needing to physically custody gold.

Tether Gold is notable for its role in financial innovation. In February 2026, gold royalty company Elemental Royalty Corporation (ELE) became the first publicly listed company to offer dividends payable in tokenized gold — specifically XAUT — making Tether Gold a key instrument in bridging traditional commodity finance with blockchain infrastructure. See: Elemental Royalty / Tether Gold Dividend Story →

Tether Investments

Beyond its stablecoin operations, Tether has deployed capital through its investment arm, Tether Investments S.A. de C.V., making strategic minority stakes in companies across technology, energy, and finance. Notable investments include:

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  Elemental Royalty Corporation (2025) — US$100 million private placement; 7.5M+ shares acquired at C$18.38/share, becoming a significant shareholder in the newly merged gold royalty company.
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  Northern Data AG — Strategic investment in high-performance computing infrastructure, supporting Bitcoin mining and AI workloads.
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  Adecoagro S.A. — Agricultural and renewable energy investments in Latin America.

Tether's investment strategy reflects a broader effort to diversify the company's balance sheet beyond US Treasuries and to establish presence in sectors deemed strategic for the long-term crypto economy.

Supported Blockchains

Tether is issued across more than a dozen blockchain networks, allowing users to transact USDT wherever they hold assets. The most widely used chains include:

Controversies & Regulation

Tether has faced persistent scrutiny from regulators, researchers, and journalists over its reserve transparency and the relationship between USDT issuance and cryptocurrency price manipulation.

Role in Crypto Markets

USDT consistently ranks as one of the highest-volume assets in global cryptocurrency trading, often exceeding even Bitcoin in 24-hour trading volume on major exchanges. Its utility stems from several key functions:

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  Trading Pair Base: Most crypto exchanges list assets against USDT, making it the de facto quote currency for crypto pairs.
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  Dollar Access: In countries with restricted USD access (Turkey, Argentina, etc.), USDT provides a practical dollar substitute.
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  Settlement & DeFi: USDT is the backbone of DeFi lending, liquidity pools, and cross-chain settlements on Ethereum and Tron.
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  Institutional Liquidity: Exchanges, market makers, and hedge funds use USDT as a low-cost, high-speed alternative to wire transfers.