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Tether's USDT Stablecoin Integrates with Bitcoin's Base Layer and Lightning Network
Coin WorldFriday, Jan 31, 2025 6:20 am ET
1min readTether, the world's largest stablecoin issuer, has announced a significant development in the stablecoin landscape. On January 30, 2025, Tether revealed its plans to integrate its USDT stablecoin with Bitcoin's base layer and Lightning Network, marking a major milestone in the stablecoin's expansion beyond traditional blockchain networks.
The integration will leverage Taproot Assets, a protocol developed by Lightning Labs that enables asset issuance on Bitcoin's base layer while allowing transactions to settle on the Lightning Network. This protocol, released in 2023, creates a bridge for stablecoins and other digital assets to utilize Bitcoin's infrastructure, combining its security with the speed and scalability of the Lightning Network.
Tether CEO Paolo Ardoino explained the practical implications of the integration, stating, "We're focusing on real-world financial applications. Our goal is to provide practical solutions for remittances, payments, and other financial applications that need both speed and reliability."
Lightning Labs CEO Elizabeth Stark emphasized the broader reach of this integration, noting, "Millions of people will now be able to use the most open, secure blockchain to send dollars globally." The company developed the Taproot Assets protocol that makes this integration possible.
The move comes at a time when Tether maintains a dominant position in the stablecoin market. Current data shows USDT has a market capitalization of $139.4 billion, almost triple that of its nearest competitor, USD Coin (USDC), which stands at $53.1 billion. In 2024, USDT processed more than $10 trillion in on-chain volume, approaching Visa's annual payment volume of $16 trillion, demonstrating the growing adoption of stablecoins in global financial transactions.
The announcement follows Tether's recent relocation to El Salvador, the first country to adopt Bitcoin as legal tender. However, the timing coincides with changes in El Salvador's crypto policies. On the same day as Tether's announcement, the country's Legislative Assembly modified its Bitcoin Law, making merchant acceptance of Bitcoin optional rather than mandatory. This change aligns with conditions set by the International Monetary Fund for a $1.4 billion loan to support El Salvador's economy.
The integration aims to expand Bitcoin's Layer-2 capabilities and could impact its competition with other blockchain networks. The combination of Bitcoin's security features and Lightning Network's speed creates new possibilities
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