Tether Bringing USDT to Bitcoin Opens Up Fast Payments and DeFi

Stablecoin issuer Tether plans to launch USDT on both Bitcoin and the Lightning Network, allowing high-speed, scalable transactions on the world’s most valuable blockchain.

By enabling stablecoin transactions directly on Bitcoin and its scalability-focused Layer 2, the Lightning Network, Tether is opening up “new opportunities for Bitcoin’s broader adoption in everyday financial systems,” the company said in a release.

“By enabling USDt on the Lightning Network, we are not only reinforcing Bitcoin’s foundational principles of decentralization and security but also creating practical solutions for remittances, payments, and other financial applications that demand both speed and reliability,” said Tether CEO Paolo Ardoino.

The company pointed to new use cases like AI payments, as well as microtransactions that have been stymied by Bitcoin’s 10-minute transaction finality speed. Efficient and inexpensive cross-border payments are another possible use.

USDT is crypto's largest stablecoin with a $140 billion market capitalization.

Bringing DeFi to Bitcoin

“Tether on Lightning will power the coming wave of AI agent transactions, allowing machines to pay machines with instant, high volume transactions,” Lightning Labs CEO Elizabeth Stark and head of business development Ryan Gentry said in a blog post. “Everything from AI agents to autonomous vehicles will pay each other with stablecoins.”

They added that USDT on Bitcoin would allow the creation of new financial products in Bitcoin’s nascent decentralized finance (DeFi) and tokenization ecosystem, “including new computation platforms, lending, trading, and financial assets on chain.”

That’s a point echoed by Joao Reginatto, chief strategy officer at stablecoin infrastructure firm M^Zero and former vice president of product for stablecoins at USDC issuer Circle.

“One of the killer use cases in crypto has traditionally been to invest in Bitcoin for the long-term with USD-denominated assets — specifically stablecoins,” Reginatto said in an email.

“Leveraging those positions by locking up Bitcoin and drawing-down loans denominated in USD stablecoins has also been a key activity by market participants.”

Assuming it works as promised, Reginatto said that “one can imagine Bitcoin trading and leveraged-long positions to potentially be implemented on-chain and without intermediation.

“This could be significant for Bitcoin in the same way that DeFi was significant for Ethereum,” he added. “Theoretically speaking, this can be a major milestone for the crypto industry.