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Stablecoin issuer Tether has reversed its earlier plan to freeze USDT operations on five blockchains, allowing transfers to continue while halting new issuance and redemption. The affected networks include Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand. The announcement comes after Tether received feedback from communities on these blockchains, prompting the firm to reconsider its strategy.
Tether’s Revised Approach
Initially, Tether had intended to end support on these networks entirely by September 1, discontinuing transfers and smart contract functionality. The revised approach allows users to move their existing tokens across the chains but eliminates official issuance and redemption. According to Tether, this ensures token transfers remain operational while focusing the company’s resources on high-activity networks with greater adoption potential.
“Following feedback from the communities of these discontinued blockchains, Tether has revised this approach and will not freeze the smart contracts on these networks,” the company stated.
Focus on High-Activity Networks
Tether’s decision aligns with its broader strategy to concentrate on blockchain ecosystems demonstrating strong developer engagement, scalability, and user demand. Tron and Ethereum remain the two primary blockchains for USDT usage, hosting circulating supplies of $80.9 billion and $72.4 billion, respectively. BNB Chain follows in third place with $6.78 billion in USDT supply, according to DeFiLlama data.
Other ecosystems, including Solana, and Ethereum layer-2 networks such as Arbitrum and Base, show healthy stablecoin activity. However, these networks predominantly use Circle’s USDC stablecoin rather than USDT. By focusing on leading networks, Tether ensures greater efficiency and widespread adoption of its stablecoin.
Impact on Affected Blockchains
Among the five networks, Omni Layer will experience the most significant impact, holding approximately $82.9 million in USDT circulation. EOS follows with $4.2 million, while Bitcoin Cash SLP, Algorand, and Kusama each hold less than $1 million.
Though the amount of USDT affected is relatively small compared to its total market supply, the decision marks a long-term shift in Tether’s blockchain support strategy. The company has been gradually reducing support for these networks over the past two years. In August 2023, Tether halted issuance on Omni Layer, Kusama, and Bitcoin Cash SLP. EOS and Algorand followed in June 2024, stopping new token minting.
Stability in Transfers
By keeping transfers operational, Tether ensures that users on these networks are not locked out of their existing USDT balances. This approach mitigates potential disruptions in trading, payments, and decentralized finance (DeFi) applications that rely on USDT liquidity. Users can continue to send and receive tokens, but all new minting and redemption requests will be handled through supported chains like Tron and Ethereum.
Growth of the Stablecoin Market
USDT and USDC continue to dominate the stablecoin market, with circulating market caps of $167.4 billion and $71.5 billion, respectively. The total stablecoin market stands at $285.9 billion, according to CoinGecko. Analysts predict that this market is poised for strong growth over the next few years, particularly in the United States.
Last month, the U.S. government passed the GENIUS Act, legislation aimed at promoting the use of stablecoins pegged to the U.S. dollar. The law is expected to strengthen the dollar’s global reserve status and encourage the adoption of digital dollar-backed assets. The U.S. Department of the Treasury forecasts that the stablecoin market could reach $2 trillion by 2028, highlighting the sector’s expansion potential.
Strategic Implications for Investors
Tether’s focus on high-activity networks is likely to benefit investors and DeFi participants in several ways:
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Reduced Operational Risk: Concentrating on leading networks minimizes vulnerabilities linked to low-activity chains.
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Improved Liquidity: Networks like Ethereum and Tron offer deep liquidity pools, ensuring smooth transfers and trading for institutional and retail users.
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Enhanced Compliance: By focusing on regulated and widely adopted networks, Tether strengthens its compliance framework and reduces regulatory uncertainty.
For smaller blockchains like Omni, EOS, and Algorand, the lack of new issuance may lead to gradually reduced USDT activity. However, the ability to transfer existing tokens preserves usability and avoids abrupt disruptions for users.
Conclusion
Tether’s decision to maintain transferability on five blockchains while ending issuance and redemption reflects a strategic shift toward efficiency, liquidity, and adoption. By concentrating resources on Tron, Ethereum, and BNB Chain, Tether strengthens the stablecoin ecosystem and ensures that users have reliable access to USDT.
As the stablecoin market continues to expand, fueled by legislation and increasing adoption, Tether remains a critical player in maintaining liquidity, facilitating transactions, and supporting decentralized finance activities worldwide. Investors and users alike should monitor network-specific activity and leverage USDT on high-activity chains for the most seamless experience.
