USDT — a bridge between traditional finance and the blockchain world
The Tether stablecoin was initially used to protect against the volatility of cryptocurrencies such as Bitcoin and Ethereum. USDT contributed to the emergence of new trading pairs (for example, BTC-USDT and ETH-USDT), which allowed investors and traders to remain within the crypto market.
However, as the number of users and Tether's liquidity grew, the range of stablecoin use cases increased significantly. USDT became not just an addition to trading pairs with other cryptocurrencies, but a full-fledged link between the traditional financial system and the digital asset market.
Tether's role in the crypto market
Tether holds a dominant position among stablecoins both in terms of market capitalization and trading volume. According to CoinMarketCap, USDT's market capitalization as of August 2025 is $164.5 billion.
In the past year alone, Tether's market capitalization has grown by more than 42%, and over the past five years, by more than 16 times. For comparison, even Bitcoin's market capitalization over the same period grew only 13 times, indicating a very high demand for stablecoins. Tether accounts for almost 59% of the entire stablecoin market capitalization.
Tether also plays a leading role in the crypto market by trading volume, being one of the most liquid assets on centralized exchanges. As of August 2025, Tether's daily trading volume reached $111 billion, more than twice that of Bitcoin and Ethereum.
As the largest stablecoin, Tether is present on most crypto exchanges and is used as one of the main gateways into the crypto market. According to analysts for 2024–2025, USDT accounts for 60% to 70% of trading volume in pairs with other cryptocurrencies on centralized exchanges.
Tether also dominates the decentralized finance (DeFi) market. Although, as analysts note, USDT's share is slightly smaller on decentralized exchanges (DEXes), Tether remains one of the most widely used stablecoins on Ethereum, Tron, Solana, and other major blockchain networks.
In 2025, Tether significantly expanded its presence in Layer-2 ecosystems and multichain protocols, including integration with Arbitrum, Base, and zkSync, allowing users to make USDT transactions with fees under $0.01. Moreover, Tether is actively entering the Real World Assets (RWA) sector, using USDT as a settlement unit in tokenized bonds.
In the DeFi market, USDT is actively used in liquidity pools for trading, yield farming, and lending. However, in the DeFi segment, Tether faces intense competition from other popular stablecoins such as USDC and DAI.
What is Tether most actively used for?
According to experts, Tether serves two main functions:
- Providing liquidity in the crypto asset market, simplifying arbitrage between pairs for traders;
- Acting as a bridge between fiat and cryptocurrencies in payment and trading operations.
The USDT stablecoin is also often seen by users as a tool for preserving value and simplifying cross-border transfers in regions with high inflation risks and currency restrictions.
USDT is most popular in regions with high inflation. Strong demand for Tether is primarily driven by limited access to banking services in developing countries in Latin America, Africa, and Southeast Asia.
For example, in Argentina, stablecoins account for 50% of all crypto transactions. Argentines actively use USDT and other stablecoins as a digital alternative to dollar savings and for international settlements. The share of USDT in cross-border payments is also growing in Mexico, Brazil, and Colombia.
A new 2025 trend is the mass adoption of USDT in Africa for micropayments and money transfers via messengers and crypto wallets with offline transaction functionality. In Nigeria and Kenya, more than 35% of P2P crypto transfers are conducted in USDT. In Turkey and Egypt, USDT has become a key tool for protecting against national currency devaluation, while in Lebanon, it has become the primary means of settlement between private businesses and foreign suppliers.
Transparency and regulation
Experts note that for sustainable stablecoin growth, the issuer must ensure reserve transparency and withstand regulatory pressure — areas where Tether has faced issues.
For example, after the Markets in Crypto-Assets (MiCA) regulation came into effect, regulators banned companies in the European Union from offering services with the USDT stablecoin. As a result, Tether had to exit the EU market.
Regulatory issues can lead to reduced trust in Tether among large investors and, consequently, a decline in its market dominance and liquidity.
For example, in terms of market capitalization growth over the past year, USDC has already surpassed Tether: 90% vs. 42%. This was partly due to Circle, the USDC issuer, obtaining licenses to operate in the EU under MiCA rules.
In response, in July 2025, Tether published its first-ever monthly report with a full breakdown of reserves by asset categories, including the share of tokenized gold (XAUT), short-term US Treasury bills, and bank deposits in Asian financial institutions.
However, analysts point out that the lack of an audit from the "Big Four" (PwC, Deloitte, EY, and KPMG) still limits institutional adoption of USDT. In addition, increased regulatory scrutiny from US and Asian authorities has already forced Tether to relocate part of its operations to friendly jurisdictions, including the UAE and Singapore.