Tether Scraps Strategy to Freeze USDT Across Five Blockchains

Stablecoin creator Tether has discarded its initiative to halt USDT smart contracts on five blockchains, stating that the tokens will remain transferable but will cease to be issued or redeemed.

The updated strategy affects users on Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand, Tether announced on Friday after gathering insights from participants in these ecosystems. “In light of the responses from the communities of these deprecated blockchains, Tether has adjusted this strategy and will not terminate the smart contracts on these platforms.”

While users will continue to transfer tokens across these blockchains, Tether is ceasing direct issuance and redemption on these networks. “This indicates that the tokens will no longer receive official support like other Tether tokens.” The original timeline was to halt support on Sept. 1.

This decision aligns with Tether’s broader vision to focus on fostering crypto ecosystems that exhibit robust developer engagement, scalability, and user inclination — without entirely forsaking chains it has historically supported. Only a limited number of smart contract-based layer-1 blockchains have attained significant user adoption and demonstrated practical applications, such as Tron and Ethereum — the two chains that Tether supports the most.

Tron and Ethereum spearhead USDT adoption

Tron and Ethereum boast $80.9 billion and $72.4 billion worth of USDT supply circulating on their respective chains, while BNB Chain completes the top three with $6.78 billion, as per DeFiLlama data.

Solana, together with Ethereum layer-2 chains Arbitrum and Base, are among the other flourishing crypto environments featuring significant stablecoin activity, although they predominantly utilize Circle’s USDC stablecoin instead of USDT.

Omni Layer to be predominantly affected

An examination of USDT balances across the impacted blockchains indicates that Omni Layer will be the most affected as it holds a net circulation of $82.9 million USDT, while other networks exhibit lesser involvement: EOS has $4.2 million, whereas Bitcoin Cash SLP, Algorand, and Kusama all possess under $1 million worth of USDT.

Tether’s phase-out plan for these blockchains has been in planning for two years. In August 2023, the firm disclosed it would cease issuing USDT on Omni Layer, Kusama, and Bitcoin Cash SLP. By June 2024, Tether terminated minting on EOS and Algorand.

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The cumulative market capitalization of stablecoins currently stands at $285.9 billion, led by USDT and USDC at $167.4 billion and $71.5 billion, respectively, as per CoinGecko data.

Stablecoin market poised for growth in upcoming years

Last month, US President Donald Trump enacted the GENIUS Act, which many analysts suggest will enhance US dollar supremacy by encouraging stablecoins pegged to the dollar, competing with other currencies and reinforcing the dollar’s position as the world’s prime reserve currency.

The US Department of the Treasury expects the stablecoin market to expand to $2 trillion by 2028.

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