Tether abandons plan to freeze USDT on five blockchains

Tether Updates Plans for USDT on Various Chains

Tether, the issuer of the stablecoin USDT, has decided not to proceed with freezing its smart contracts across five blockchain networks. They announced that while the token remains transferable, they will cease issuing or redeeming it on these platforms.

This change will impact users on Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand. Tether noted that this revision comes after receiving feedback from communities within these ecosystems. “After considering input from these blockchain communities, Tether will not be freezing smart contracts on these networks,” the company said on Friday.

Users will still be able to transfer tokens to these blockchains, but Tether has halted the direct issuance and redemption specifically for these networks. “This means these tokens will no longer receive official support in the same way as other tether tokens.” Initially, the plan was to conclude support by September 1st.

This decision aligns with Tether’s broader strategy aimed at enhancing support for crypto ecosystems characterized by robust developer engagement, scalability, and demand from users. Only a small handful of smart contract-based layer 1 blockchains have gained significant user adoption and demonstrated practical use cases, particularly Tron and Ethereum.

Leading Adoption: Tron and Ethereum

Tron and Ethereum dominate USDT supply with approximately $80.9 billion and $72.4 billion circulating within their respective chains, while the BNB chain ranks third with about $6.788 billion, according to recent data.

Meanwhile, Solana, along with Ethereum Layer-2 solutions like Arbitrum and Base, primarily utilizes USDC Stablecoin, indicating that it is a heavily stablecoin-focused ecosystem.

Omni Layer Faces Major Impact

A review of USDT balances shows that the Omni Layer is the most significantly impacted with a net distribution of $82.9 million, while other networks show lower participation rates. Specifically, EOS has $4.2 million, while Bitcoin Cash SLP, Algorand, and Kusama each hold less than $1 million in USDT.

Tether’s plan to phase out support for these blockchains has been under consideration for two years. In August 2023, the company had indicated it would stop issuing USDTs on Omni Layer, Kusama, and Bitcoin Cash SLPs. The minting of USDT on EOS and Algorand was halted in June 2024.

Currently, the total market cap for stablecoins sits at $285.9 billion, with USDT and USDC leading the pack at $167.4 billion and $71.5 billion, respectively, based on Coingecko data.

Future Outlook for the Stablecoin Market

In a related development, last month, U.S. President Donald Trump signed the Genius Act, which many analysts believe will enhance the dollar’s supremacy by promoting stablecoins pegged to the dollar. This move may strengthen the dollar’s position as the primary reserve currency globally.