Tether to Cease USDT Issuance on Five Blockchains, Shifts Focus to Bitcoin RGB Protocol

Tether is halting USDT issuance and redemption on five blockchains by September 2025 and shifting focus to the Bitcoin RGB protocol. The affected blockchains include Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand. Users should expect potential liquidity migrations and strategic adjustments. Tether aims to optimize operational efficiency and improve regulatory clarity by focusing on scalable networks like Ethereum and Bitcoin.

Stablecoin issuer Tether has announced a significant change in its strategy regarding the issuance and redemption of USDT on five legacy blockchains. Effective September 1, 2025, Tether will halt USDT issuance and redemption on the Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand blockchains. This decision follows extensive feedback from user communities and aligns with Tether's broader strategy to focus on active, high-demand networks [1].

While users will still be able to transfer USDT tokens between wallets, these assets will no longer receive official backing from Tether. This move aims to reduce operational burden and avoid reputational risks associated with supporting low-traffic chains [2]. Tether plans to discontinue direct issuance and redemption on these blockchains, effectively leaving the tokens in a financial limbo.

The decision to walk back the freeze plan was likely driven by the reputational risk it posed. Tether is instead opting for a pragmatic compromise that allows it to shed the operational burden of supporting low-traffic chains while avoiding the public relations nightmare of destroying user assets [2]. By focusing on higher-traffic, secure blockchains, Tether aims to reduce operational burden and avoid reputational risks. This strategy is expected to improve the scalability, efficiency, and relevance of USDT in the cryptocurrency ecosystem.

In parallel, Tether is expanding its support to more active and secure blockchains. Just one day prior to this announcement, Tether revealed plans to launch a native USDT on Bitcoin via the RGB protocol. This move is seen as Tether's strategic bet on Bitcoin's foundational security, aiming to enhance liquidity and access for Bitcoin transactions [3].

Tether's recent integration of its USDT stablecoin onto the Bitcoin network via the RGB protocol marks a watershed moment in cryptocurrency history. By leveraging RGB’s off-chain data storage and Bitcoin’s immutable ledger, Tether has transformed Bitcoin from a digital store of value into a scalable, privacy-preserving payments layer. This innovation not only redefines Bitcoin’s utility but also positions it as a direct competitor to Ethereum-based stablecoins, with the added advantages of lower costs and enhanced security [3].

The RGB protocol, now mainnet-ready with version 0.11.1, enables the issuance of digital assets like USDT on Bitcoin without burdening the blockchain with transaction data. Instead, ownership proofs are anchored to Bitcoin transactions, while sensitive data remains off-chain, stored on users’ devices. This design minimizes chain bloat, reduces fees, and ensures compatibility with the Lightning Network, which already facilitates instant micropayments [3].

Institutions are already shifting in response to this integration. Over 30% of institutional Bitcoin holdings are paired with stablecoin strategies, and Tether’s RGB integration offers a seamless solution for liquidity management, hedging, and programmable finance. Institutions can now leverage USDT’s $167 billion liquidity alongside Bitcoin’s security, enabling automated yield farming, decentralized lending, and real-time cross-border settlements [3].

Tether’s financial strength—$4.9 billion in Q2 2025 profits and a 68% stablecoin market share—further bolsters confidence in this transition [3]. The RGB protocol’s Lightning Network compatibility also reduces reliance on alternative blockchains for stablecoin issuance, consolidating Bitcoin’s dominance in the payments space [3].

For investors, this development signals a paradigm shift. Bitcoin is no longer just “digital gold” but a foundational infrastructure for global finance. The RGB-USDT integration could accelerate Bitcoin’s adoption as a settlement layer for DeFi, corporate treasuries, and retail payments, particularly in regions with underdeveloped banking systems. However, risks remain. Regulatory scrutiny of stablecoins and RGB’s nascent adoption could slow momentum. Yet, given Tether’s market influence and Bitcoin’s growing institutional backing, these challenges appear manageable.

References:
[1] https://cointelegraph.com/news/tether-drops-plan-to-end-usdt-on-five-chains
[2] https://www.ainvest.com/news/tether-shifts-focus-abandons-freeze-plan-legacy-usdt-2508/
[3] https://www.ainvest.com/news/bitcoin-dawn-tether-usdt-rgb-protocol-rise-global-payments-ecosystem-2508/