Investing in Tether (USDT) – Everything You Need to Know

What is Tether?

Tether is a type of digital asset known as a stablecoin.    It is the worlds largest stablecoin by marketcap, and is issued by Tether Limited – a sister company to Bitfinex.

What is Tether's Purpose?

The purpose of Tether (USDT), along with most stablecoins, is to provide investors and traders with a digital asset that minimizes fluctuation in value.  Providing such stability allows for holders to remove oneself from the volatility that can sometimes plague the digital asset market as a whole, without incurring any tax implications at the time.

Such assets also provide holders with the ability to transfer value anywhere in the world, at any time, for minimal cost.  As such, the use of stablecoins such as Tether (USDT) are very common in the remittance industry and among remote workers.

How does Tether Work?

The stability which Tether (USDT) is able to boast is achieved through what is known as ‘pegging'.  This process involves maintaining a 1:1 ‘peg' with a variety of real-world assets – predominantly the US Dollar.

When a user purchases USDT, they deposit an equivalent amount of fiat currency into Tether Limited's reserves. Tether Limited then issues an equivalent amount of USDT tokens on the chosen blockchain network, such as Ethereum or Tron. These tokens can be transferred, traded, or held by users.

History

Tether (USDT) was launched in 2014 by Tether Limited, aiming to provide a stablecoin solution in the cryptocurrency market. Initially operating on the Bitcoin blockchain, it later expanded to other networks like Ethereum and Tron.

Controversies have surrounded Tether throughout its history. One major concern revolves around the transparency and auditability of its reserves. Tether Limited has faced criticism for not providing regular audits that independently verify the backing of its USDT tokens, leading to skepticism about the actual reserve holdings.

In 2023, Tether has begun to address such criticisms, proffering greater transparency in to its asset holdings meant to back USDT.

Regulatory Status

Stablecoins in general remain in a relative state-of-limbo with regards to regulation.  While their use is widespread, their potential classification as a security has been brought in to question on various occasions as entities such as the Securities and Exchange Commission (SEC) look to exert power over the industry as a whole.

Tether (USDT) itself has not been immune to legal and regulatory scrutiny over the years.  A standout example of this occurred in 2019 when the New York Attorney General's office accused Tether and Bitfinex of engaging in a cover-up to hide the loss of $850 million in client and corporate funds. The case resulted in a settlement requiring Bitfinex and Tether to pay a fine and provide regular reporting on their reserves.

How to Buy ‘USDT'

Currently, Tether (USDT) is available for purchase on the following exchanges.

Uphold – This is one of the top exchanges for United States residents that offers a wide range of cryptocurrencies. Germany & Netherlands are prohibited.

Uphold Disclaimer: Terms Apply. Cryptoassets are highly volatile. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.

Coinbase – A publicly traded exchange listed on the NASDAQ. Coinbase accepts residents from 100+ countries, including Australia, Canada, France, Germany, Netherlands, Singapore, the United Kingdom, and the United States (excluding Hawaii).

Kraken – Founded in 2011, Kraken is one of the most trusted names in the industry and offers trading access to over 190 countries, including Australia, Canada, Europe, and the United States (excluding Maine, New York, and Washington state).

Tether (USDT) – The Alpha Among Stablecoins

While there are a variety of stablecoins on the market which offer similar benefits to Tether (USDT), none have been able to match the popularity of this project to date.  It is widely accepted across most digital asset platforms, boasts unrivaled liquidity within its asset class, and has proven to be quite resilient since it launched years ago.

Tether (USDT) is currently the ‘alpha' among stablecoins, and appears positioned to maintain this moniker for years to come.