Bitcoin-based USDT: what lies behind RGB technology
In July, Tether, the issuer of the largest stablecoin, announced plans to launch USDT on Bitcoin through a specialized protocol.
Back to the roots: the history of USDT began with Bitcoin
USDT was originally launched under the name Realcoin on the Bitcoin blockchain to address the digital asset's volatility problem. Omni Layer served as the primary protocol for launching Tether. Omni Layer is a software protocol that operates on top of the Bitcoin blockchain as an additional layer.
Just a few months later, Realcoin was renamed Tether (USDT). Over time, USDT was introduced on other major blockchains, including Ethereum, TRON, Solana, Avalanche, and others.
The shift in activity to other networks was primarily driven by the growing popularity of USDT as a payment instrument. Users required fast, inexpensive transfers, whereas transactions through Omni depended on congestion on the main Bitcoin network and required fees paid in BTC.
By 2017, Tether's market capitalization had exceeded $100 million for the first time, and in 2020 it surpassed $10 billion. As of July 2026, USDT is the leading stablecoin, with a market capitalization exceeding $184 billion.
Over the past three years alone, this figure has more than doubled. By market capitalization, USDT ranks among the three largest cryptocurrencies, behind only Bitcoin (BTC) and Ethereum (ETH). The scale of USDT is particularly evident on the TRON network: by July 2026, the volume of stablecoins issued on it had exceeded $90 billion. This means that the new implementation of USDT on Bitcoin will have to compete with an already established infrastructure of wallets, exchanges, and payment services on other blockchains.
USDT in the Bitcoin ecosystem
On 1 September 2025, Tether, the company behind the stablecoin, discontinued support for USDT on the Omni Layer protocol and four other blockchains:
This involved ending the issuance and redemption of USDT on these networks and freezing the remaining tokens. Users were advised to transfer their assets to supported blockchains in advance or exchange them through the available infrastructure.
Tether explained its decision by citing the low throughput of these networks and the high transaction costs, which no longer met users' growing needs.
In July 2026, Tether unexpectedly announced plans to bring USDT back to the Bitcoin ecosystem. The company is preparing to issue tokens using the RGB protocol.
RGB is a technology that enables the issuance of crypto assets, including stablecoins, NFTs (non-fungible digital assets), and other tokens. RGB interacts with the Bitcoin network and the Lightning Network (LN) payment solution, helping scale the blockchain and transform it into a convenient financial infrastructure.
The concept behind the RGB protocol was first proposed in 2016 by Bitcoin Core developer Peter Todd, although the project was not implemented until 2019.
The integration of USDT with Bitcoin will be led by UTEXO, a company that has developed an infrastructure platform for digital payments using stablecoins within the Bitcoin ecosystem. In March 2026, UTEXO raised $7.5 million in funding, including investment from Tether itself.
From a technical perspective, the integration of USDT with the RGB protocol will allow users to store USDT and conduct stablecoin transactions in the same wallet as Bitcoin. In addition, USDT on RGB will support offline payments, meaning transactions that do not require real-time synchronization with the blockchain.
What will change for users
For an ordinary USDT holder, the main benefits may include the following:
- the ability to store BTC and USDT in a single application;
- faster and cheaper transfers through the Lightning Network;
- greater privacy;
- access to USDT through Bitcoin infrastructure without using cross-chain bridges;
- the ability to make local payments during periods of unstable internet connectivity, followed by subsequent synchronization.
At the same time, USDT on RGB will not be automatically interchangeable with USDT on other blockchains at the technical level. To transfer an asset, for example, from TRON to RGB, a user will need an exchange, the issuer, a specialized service, or other infrastructure capable of redeeming the tokens on one network and issuing them on another.
Consequences for USDT and Bitcoin
The return of USDT to the Bitcoin ecosystem will help increase the market liquidity of both the stablecoin itself and the first cryptocurrency. Tether's integration with the RGB protocol may attract major traders and institutional investors.
For Tether, the integration represents infrastructure diversification. A significant share of USDT is currently concentrated on several networks, so the emergence of another major settlement channel will reduce the issuing company's dependence on the technical and regulatory environment surrounding any individual blockchain.
Moreover, following the integration of USDT with the RGB protocol, Bitcoin's role will extend beyond that of a store of value. This step may strengthen Bitcoin's influence in the DeFi (decentralized finance) market, including the rapidly developing RWA (real-world assets) segment.
RGB will provide Bitcoin with tools for the tokenization, or blockchain-based issuance, of traditional assets such as gold, oil, real estate, deposits, and treasury bonds.
The return of USDT to the Bitcoin ecosystem may also attract new developers, thereby stimulating further development.