Tether, known by its ticker symbol USDT, is the most widely used stablecoin in the cryptocurrency market. As of early 2026, there are more than 140 billion USDT tokens in circulation, making it larger by market capitalisation than all other stablecoins combined. This guide explains what Tether is, how it works, what backs its value, and what risks are involved.
What Is a Stablecoin
A stablecoin is a type of cryptocurrency designed to maintain a stable value, usually pegged to a traditional currency such as the US dollar. Unlike Bitcoin or Ethereum, whose prices fluctuate significantly, one USDT is intended to always be worth one US dollar. This makes stablecoins useful for trading, transfers, and as a way to hold value in the crypto ecosystem without exposure to price volatility.
Stablecoins serve a practical purpose: they allow users to move money between cryptocurrency exchanges quickly and cheaply, without converting back to traditional bank accounts. A transfer of USDT between two wallets typically takes seconds and costs less than one dollar in fees, compared with international bank transfers that can take days and cost $25 to $50.
How Tether Maintains Its Peg
Tether Limited, the company behind USDT, claims to hold reserves equal to or greater than the total number of USDT tokens in circulation. In theory, every USDT is backed 1:1 by reserves. When a user deposits one dollar with Tether, the company issues one USDT token. When a user redeems USDT for dollars, Tether destroys the token and returns one dollar.
According to Tether's quarterly attestation reports (published on tether.to), the reserves as of December 2025 consisted of approximately 84% US Treasury bills, 5% overnight reverse repurchase agreements, 4% money market funds, 3% Bitcoin, and the remainder in secured loans and other investments.
Where USDT Is Used
USDT is available on virtually every major cryptocurrency exchange, including Binance, Kraken, and Bybit. It is issued on multiple blockchain networks, with the largest circulation on the Tron network (approximately 60 billion USDT) and Ethereum (approximately 55 billion USDT). Smaller amounts circulate on Solana, Avalanche, and other networks.
Beyond trading, USDT is widely used for cross-border remittances, particularly in regions with limited access to traditional banking. In countries experiencing currency instability, such as Argentina and Turkey, USDT has become a de facto savings tool for some individuals seeking to hold dollar-denominated assets outside the formal banking system.
Tether Gold: XAUT
Tether also issues Tether Gold (XAUT), a token backed by physical gold stored in Swiss vaults. Each XAUT token represents one troy ounce of gold. As of early 2026, there are approximately 246,500 ounces of gold backing the token, valued at approximately $760 million at current gold prices.
A similar product, PAX Gold (PAXG), is issued by Paxos and backed by gold bars stored in London vaults. Both products allow investors to gain exposure to gold prices without the logistical challenges of buying and storing physical bullion.
Risks and Controversies
Tether has faced criticism and regulatory scrutiny over the years. In 2021, the company paid an $18.5 million fine to the New York Attorney General's office for misrepresenting the nature of its reserves. At the time, Tether had claimed full dollar backing but was found to have held a mix of assets including commercial paper and corporate bonds.
Since then, Tether has shifted its reserves toward US Treasury bills, which are considered among the safest assets available. However, the company has never undergone a full independent audit (as distinct from the quarterly attestation reports it publishes), which remains a point of concern for some market participants.
There is also "counterparty risk" - the risk that Tether Limited could become insolvent or that regulators could freeze its operations, potentially causing USDT to lose its peg. While this scenario remains unlikely given Tether's current reserve composition, it is a risk that holders should be aware of.
Competing Stablecoins
USDT is not the only stablecoin available. USD Coin (USDC), issued by Circle, has approximately 45 billion in circulation and is considered more transparent, with monthly attestation reports from Deloitte. Dai (DAI) is a decentralised stablecoin backed by cryptocurrency collateral rather than fiat reserves. More recently, PayPal's PYUSD has gained traction, particularly in the United States.
For current stablecoin market data, visit CoinMarketCap Stablecoin Tracker.