Tether’s USDT Launch on Bitcoin a Strategic Play To Distract From Audit Pressures

Key Takeaways

• Tether integrates USDT into the Bitcoin Lightning Network.
• The launch comes amid mounting scrutiny over Tether’s audits and EU exit.
• Despite regulatory challenges, Tether recently moved its headquarters to El Salvador.

After years of demand from Bitcoin (BTC) and Lightning users, Tether is finally bringing USDT, the largest stablecoin by market cap, to the network.

However, Tether’s Bitcoin integration comes at a time when the company continues to grapple with deep-rooted concerns that have followed it for years: the absence of third-party audits and growing scrutiny over its reserves.

Tether’s Bitcoin Integration

On Jan. 30, Tether unveiled its long-awaited integration of USDT into Bitcoin’s main chain and the Lightning Network, marking a significant milestone for both the stablecoin and the cryptocurrency ecosystem.

The integration is powered by the Taproot protocol, developed by Lightning Labs, and aims to create a more efficient means of transacting with Bitcoin.

Tether’s integration comes at a time when both institutional and retail demand for Bitcoin continues to rise.

The company has positioned USDT as a vital part of the Bitcoin financial ecosystem, with CEO Paolo Ardoino highlighting the potential for enhanced speed and reliability in financial transactions.

In the official statement, he said, “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.”

While Bitcoin and Lightning users have welcomed the integration, critics point to Tether’s continued failure to address its audit issues. This long-standing challenge has raised doubts about the company’s ability to operate within a regulated environment.

The Audit Crisis That Won’t Go Away

Tether has faced regulatory scrutiny for years, largely due to its inability to provide independent third-party audits of its reserves.

While the company has claimed that its reserves are backed by a mix of cash, cash equivalents, and volatile assets like Bitcoin, these assurances are based solely on Tether’s own statements—without any external verification.

Despite being the largest stablecoin in terms of market capitalization, with over $130 billion and more than 70% market dominance, Tether’s lack of transparency continues to concern regulators.

The company’s reluctance to undergo third-party audits has been a persistent issue, with many calling for more oversight, especially as the stablecoin plays an increasingly integral role in global crypto markets.

Tether’s struggles with regulatory compliance are not limited to audits.

In December 2024, as the EU’s Markets in Crypto-Assets (MiCA) regulations came into full effect, Tether was forced to exit the European market after failing to secure the required e-money license.

Several major crypto platforms operating in the EU, including exchanges, also delisted USDT, signaling that Tether’s failure to meet European regulatory standards may have broader consequences.

Tether’s departure from the EU is just one aspect of a broader strategy to move to more crypto-friendly jurisdictions.

In recent months, the company shifted its headquarters to El Salvador, a move that many interpret as an effort to avoid the stringent regulations that have been enforced in other parts of the world.

While Tether attributes its exit from the EU to the complexity of MiCA’s regulations, critics argue that the company is simply seeking jurisdictions where regulatory scrutiny is lower.