Tether Backtracks Amid Regulatory And User Pressure

Tether, undisputed giant of stablecoins, backtracks on a decision that shook the crypto ecosystem in July. While it planned to end support for USDT on five historic blockchains, the issuer ultimately grants an unexpected reprieve to its users. Why this reversal, and what does it reveal about Tether’s strategy in the face of regulatory challenges and competition?

Tether reverses its decision, operations maintained on five blockchains

Last July, Tether surprised by announcing the end of USDT support on five historic blockchains. Paolo Ardoino, heading the company, then justified this choice by a “change of commercial strategy” and the desire to focus on more scalable and widely used networks.

Approaching the September 1, 2025 deadline, the pressure was mounting: USDT holders on these chains were to urgently repatriate their tokens. But in a twist, Tether has just announced a reversal. In a statement published on its official site, the company specifies that investors “will no longer need” to transfer their tokens.

Officially, this backtrack comes from “feedback from communities regarding these abandoned blockchains.” A diplomatic phrase that likely hides a sharper contestation than expected. Because for a player of Tether’s scale, abruptly cutting all ties with certain ecosystems, even declining ones, would have represented a major reputational risk.

The figures, however, largely justified the initial decision. On Kusama, barely 250,000 USDT remain in circulation. On Bitcoin Cash, the million mark isn’t even reached. As for Omni Layer, the historic pioneer of USDT transfer since 2014, its 82 million active tokens seem like a drop in the ocean compared to the $80.9 billion circulating today on Tron.

A strategic compromise between abandonment and maintenance

Tether’s new approach represents a much more nuanced strategy. Rather than a brutal abandonment, the company chooses an intermediate formula: direct issuance and redemption of USDT cease, but transfers between wallets remain possible. Smart contracts, contrary to the first announcements, will therefore not be frozen.

This halfway measure offers a dual advantage. On one side, it reassures the concerned communities, sparing them from seeing their tokens blocked. On the other, it allows Tether to refocus its resources on truly promising ecosystems. 

Today, most USDT activity concentrates on Tron ($80.9 billion in circulation) and Ethereum ($72.4 billion). The BNB Chain completes this leading trio with around $6.8 billion.

But beyond the numbers, the regulatory stakes weigh heavily in this decision. With the “stablecoin bill” project in the United States and the application of MiCA in Europe, Tether must adjust its sails. Reducing exposure to secondary blockchains, little used and harder to regulate, helps limit legal risks.

This repositioning fits into a long-term strategy. Tether does not only issue USDT: the company invests in innovation, exploring avenues such as autonomous AI or open source applied to bitcoin mining. A way to consolidate its dominance on key markets while diversifying its influence in the crypto ecosystem.

This sequence also illustrates a broader truth: crypto is entering a maturity phase. Blockchains can no longer rely on their past or technical prestige to survive. They must prove their relevance through innovation, the vitality of their community, and the added value of their applications. In a market where USDT already weighs over $167 billion, every strategic choice becomes decisive.