Tether CEO Paolo Ardoino shut down rumors of a Tether blockchain, stating: “Tether has no plans to build an official blockchain at this time.”
Instead, Tether is backing the integration of its stablecoin, USDT, on different networks to support decentralized use cases, such as gas fees, on independent Layer 2 (L2) solutions.
Tether’s stance on neutrality guides this decision, with the motto ‘Unstoppable TogETHER’, indicating a preference for collaborating with other projects rather than consolidating control.
The rumor mill surrounding a potential Tether chain is fueled by the company’s dominance and constant attention from regulators. But Ardoino added:
“Any product/announcement made in the next week would probably end up being swept away by the election noise. I have to postpone the release of new products by seven days.”
Tether’s market dominance and surveillance
USDT is the largest stablecoin by market capitalization, pegged to the US dollar and valued at over $118 billion at the time of writing. It controls approximately 75% of the stablecoin market, cementing its role as the main fiat gateway in the crypto ecosystem.
USDT allows traders on various exchanges to quickly move in and out of crypto, bridging the gap between digital assets and fiat money.
Tether’s expansion into different networks fueled the blockchain rumors. Recently, Tether launched USDT on The Open Network (TON), increasing the offering on TON to over $1 billion shortly after.
Regulatory scrutiny has kept Tether in the spotlight, with investigations into possible involvement in money laundering and sanctions violations. These probes are making waves in the market. Tether’s reserve support and transparency have come under fire.
USDT itself briefly fell below its dollar peg as news of the investigations emerged, a reaction that underlines the market’s sensitivity to all things Tether.
Tether’s transparency issues are not new either. The last full audit took place in 2021, leaving investors wary of its financial health. Critics like Cyber Capital founder Justin Bons are calling Tether a “scam,” accusing the company of not having enough reserves and likening it to “printing counterfeit money.”
The market buzz over Tether’s governance — whether it would benefit from a more transparent structure, like its own chain — has grown louder. But Tether is sticking to its “no blockchain” stance regardless of outside pressure.
Ripple’s CEO even went so far as to predict a “Black Swan event” related to Tether’s regulatory issues, hinting at potential consequences if Tether does not address its transparency issues.
Amid this speculation, the industry is wondering whether a Tether blockchain could address compliance and make Tether’s operations less opaque. But so far, Tether refuses to entertain the idea.
Response to allegations of manipulation
Tether has faced waves of accusations that USDT is being used to manipulate crypto prices, especially Bitcoin. The company has responded to these claims by calling them “reckless and false.”
According to Tether, the idea that USDT is being issued to drive up prices reveals a lack of understanding about the stablecoin’s role in the market. Tether’s general counsel argues that such accusations fail to understand the fundamental dynamics of USDT’s interaction with crypto markets.
Academic studies are fueling some of this criticism, with a high-profile paper by John M. Griffin and Amin Shams suggesting that Tether issuance is driving Bitcoin prices. Tether fired back, calling the study “fundamentally flawed.”
The company claims that the authors relied on limited and cherry-picked data and lacked precise transaction details and exchange flows, which skewed their conclusions. Tether argues that the patterns could just as easily represent legitimate purchases as unsecured issuances.
Tether claims that each USDT token is fully backed by reserves, issued based on market demand rather than for price manipulation. They emphasize that the issuance of USDT reflects utility and acceptance on exchanges, and not attempts to meddle with prices.
In legal battles, Tether and Bitfinex, its affiliated exchange, claim the allegations against them lack evidence. Plaintiffs claiming price inflation was coordinated through USDT have not provided sufficient evidence, according to Tether’s legal team.
Tether emphasizes that USDT growth and issuance levels reflect utility and demand in the market – and not any behind-the-scenes manipulation.
