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Tether issues a digital dollar called USDT that people use to move and hold money on crypto networks.
Tether runs the biggest "stablecoin" in the world. A stablecoin is a digital token designed to always be worth one US dollar, so people can hold and move dollars across crypto networks without touching a bank. Tether's token is called USDT, and it is the main way traders park cash between crypto bets and the closest thing the crypto world has to a dollar. You buy USDT by sending Tether real dollars; Tether keeps those dollars (and other reserves) and hands you tokens that it promises to redeem one-for-one.
Here is the money machine. Tether takes in billions of real dollars and invests them mostly in short-term US government debt and similar safe assets. Those investments pay interest, and Tether keeps the interest — it does not pass it on to token holders. In 2024, that simple spread earned Tether roughly $13 billion in profit, which is more than many major banks make. The company also lends some of its reserves out and invests in things like bitcoin, which adds risk and return. It does not charge most customers a fee to create or redeem tokens, because the interest on the reserves is the real business. Tether's edge is being first and biggest. USDT has far more users and trading volume than its main rival, Circle, whose stablecoin is USDC. The network effect is brutal: traders use USDT because everyone else uses USDT, and it is available on almost every exchange and blockchain. Its biggest market is actually outside rich countries — people in places with shaky currencies, like Argentina, Turkey, and Nigeria, use USDT as a savings account and a way to get paid or send money. That is a real service, and it is why the token keeps growing.
The messy part is trust. For years, Tether refused to give a full, audited breakdown of its reserves, and regulators fined it and its sister exchange Bitfinex for misleading claims about backing. A 2021 settlement with US regulators cost $41 million and forced quarterly reporting. Tether now publishes attestations — snapshots signed by an accounting firm — but still no full audit, and critics note its reserves include bitcoin, gold, and secured loans, not just cash and Treasuries. USDT is also the go-to coin for money launderers and sanctions dodgers, which has drawn scrutiny and new rules. The whole business rests on one belief: that a dollar of USDT is really a dollar. If that belief cracked, the run would be fast and ugly, because Tether's promise is only as good as the assets behind it.
Saved answer · last researched 4 Nov 2026