Tether, ticker USDT, is a stablecoin designed to hold a value of one US dollar, backed by reserves the issuer holds. By daily volume, it is the most traded cryptocurrency and the largest stablecoin. In 2026, USDT accounted for roughly 59% of all stablecoin supply, and Tether reported holding around $113 billion in US Treasury securities in the first quarter.
What USDT does
Two jobs, and the first explains why it is so large.
The base currency of crypto trading. USDT is the most liquid quote asset on nearly every major exchange. Traders park in it between positions rather than converting back to fiat, which is slow and expensive.
A dollar substitute in countries with high inflation, capital controls, or limited banking access. Much of USDT's demand comes from outside the US and outside the major financial centres, where holding a dollar-denominated token is easier than holding dollars.
How the peg works
Tether issues one USDT for every dollar of reserves it takes in and redeems at par for verified customers.
That redemption right is what holds the price. If USDT trades below $1, arbitrage traders buy it cheaply and redeem it for a full dollar, which pushes the price back up. If it trades above, new issuance brings it back down.
Under severe stress, the peg has held with brief exceptions. During the 2022 turmoil following Terra's collapse, USDT traded near $0.945, driven by redemption pressure rather than any confirmed shortfall, and recovered.
The reserve question
Here is the controversy that has followed Tether since 2017, and the honest account has two parts.
The history. In 2021, Tether settled with the New York Attorney General over claims that USDT had not always been fully backed as represented, paying $18.5 million without admitting wrongdoing. Its reserves at various points included commercial paper and other assets that critics considered opaque.
The present. Tether now publishes quarterly attestations and reports reserves dominated by US Treasury bills. The Q1 2026 figure of roughly $113 billion in Treasuries would make it one of the larger holders of US government debt globally.
Between an attestation and a full audit sits the point of contention. At a moment in time, an attestation confirms balances. Over a period, an audit examines controls and processes. Tether has published the former.
USDT vs USDC
| USDT (Tether) | USDC (Circle) | |
|---|---|---|
| Share of stablecoin supply, 2026 | Roughly 59% | Roughly 24% |
| Primary demand | Offshore, emerging markets, exchange trading | US and European regulated frameworks |
| MiCA compliant in the EU | No, and EU exchanges delisted it | Yes |
| Reserve reporting | Quarterly attestations | Monthly attestations |
| Notable depeg | Near $0.945 in 2022 | About $0.87 in March 2023 |
Both are fiat-backed dollar stablecoins. Serving different markets, they are divided mainly by regulatory positioning.
The regulatory position in 2026
Two frameworks matter.
In the EU, MiCA's stablecoin rules applied from June 2024. USDT does not meet them, and EU exchanges removed it, leaving USDC and EURC as the compliant defaults.
In the US, the GENIUS Act takes effect on 18 January 2027. It requires licensed issuers to hold reserves in cash and short-term Treasuries and to redeem at par. Tether's US availability after that date depends on whether it obtains a licence, restructures, or qualifies under the law's foreign-issuer provisions. Those permit access where the issuer can comply with lawful orders and a reciprocal arrangement exists.
The March 2026 SEC-CFTC interpretation placed payment stablecoins in their own category, outside securities law, which settled one question while GENIUS implementation settles the rest.
Risks to understand
- Issuer risk. USDT's value depends on Tether holding what it says it holds and honouring redemptions.
- Attestation, not audit. The reserve reports confirm balances rather than examining controls.
- Regulatory exclusion. Already delisted in the EU, with US status pending.
- Freeze capability. Tether can and does freeze addresses at law enforcement request, which protects against theft and means your balance is not unconditionally yours.
- Concentration. One private company issues the asset most of crypto trades against.
- Redemption access. Direct redemption is available to verified institutional customers, not to every holder. Retail relies on exchange liquidity.
Where mb.io fits
For most crypto trading, stablecoins are the base currency, which makes where you hold them a counterparty decision.
mb.io is a regulated crypto spot exchange backed by MultiBank Group, a financial institution founded in 2005 that serves more than 2 million clients across 100+ countries.
- Regulated by VARA in the UAE and AUSTRAC in Australia
- 10/10 security score from Hacken, an independent blockchain security auditor
- Institutional-grade MPC custody powered by Fireblocks, with segregated client funds
- Fiat on and off ramps supporting Visa, Mastercard, SWIFT, and PIX
- Buy, sell, and swap in three steps, from sign-up to purchase
- 24/7 multilingual client support
Open your account and start trading on mb.io.
Frequently asked questions
What is USDT?
Tether's dollar stablecoin, designed to hold a value of one US dollar and backed by reserves the issuer holds. With roughly 59% of supply in 2026, it is the largest stablecoin.
Is Tether fully backed?
Tether publishes quarterly attestations reporting reserves dominated by US Treasury bills, around $113 billion in Q1 2026. Critics note an attestation confirms balances at a point in time rather than auditing controls over a period.
Has USDT ever lost its peg?
Briefly. It traded near $0.945 during the 2022 turmoil after Terra's collapse, driven by redemption pressure, and recovered. Otherwise, its record under stress has held.
Why was USDT removed from EU exchanges?
Because it does not meet MiCA's requirements for e-money tokens, which applied from June 2024. USDC and EURC became the compliant alternatives in Europe.
Will USDT be allowed in the US under the GENIUS Act?
That depends on whether Tether obtains a US licence, restructures its reserves, or qualifies under the law's foreign-issuer provisions before the 18 January 2027 effective date.
Can Tether freeze my USDT?
Yes. At law enforcement request, Tether can and does freeze specific addresses. That protects against theft, and it means a balance is not unconditionally the holder's.
What is the difference between USDT and USDC?
USDT and USDC are both fiat-backed dollar stablecoins. Larger, USDT skews toward offshore and exchange demand. Smaller, USDC is built for US and EU regulated frameworks, where USDT is excluded or pending.
Who can redeem USDT directly with Tether?
Verified institutional customers meeting minimum thresholds. Most holders rely on exchange liquidity rather than direct redemption, which works because arbitrage keeps the exchange price near $1.
