Key Takeaways
- RGB is a smart contract layer for Bitcoin that enables the issuance of various assets.
- Tether has announced plans to launch an RGB implementation of USDT.
- The initiative sits in a long tradition of Bitcoin-based stablecoin projects.
Tether plans to launch USDT on RGB—a smart contract protocol for issuing digital assets on the Bitcoin Lightning Network.
The move brings stablecoins to the Bitcoin ecosystem in a new way, without relying on sidechains or bloating the mainnet with excessive OP_RETURN data.
Stablecoins on Bitcoin
For Tether, embracing RGB brings the stablecoin issuer full circle. Way back in 2014, the first USDT was issued on Omni Layer, a digital asset solution that embeds token data directly into Bitcoin transactions.
While Tether never officially retired Omni Layer USDT, usage declined significantly once Ethereum arrived on the scene. Today, around 95% of all USDT lives on Ethereum or Tron.
Arguably, Omni Layer’s biggest weakness is that it is too integrated with the Bitcoin mainnet.
Because every Omni transaction is stored on-chain, high volumes tend to spike fees, preventing the kind of scalability required for stablecoins.
When the next generation of Bitcoin-based stablecoins emerged, they sought to overcome this challenge by processing transactions away from the mainnet.
For example, rDAI and Money on Chain’s DOC are deployed on the Rootstock sidechain.
Now, Tether’s proposed RGB implementation is exploring yet another way to bring stablecoins to Bitcoin.
What is the RGB Protocol?
RGB, which stands for “Really Good Bitcoin,” is a smart contract platform that uses the Bitcoin Lightning Network as a settlement layer.
Instead of being a separate blockchain like Rootstock or Liquid, RGB uses client-side validation.
Most of the transaction data, like token rules, transfers, and ownership proofs, is kept off-chain with the users. However, to anchor security, RGB places small cryptographic commitments inside Bitcoin transactions. For USDT, these commitments essentially function as immutable transaction receipts.
Privacy Advantages
Beyond scalability, another big advantgae of RGB is privacy.
Because the protocol doesn’t print reams of transaction data on-chain, stablecoin transactions can’t be easily traces like they can on Ethereum or Bitcoin sidechains.
Emphasizing this point, Tether CEO Paolo Ardoino stated that “Bitcoin deserves a stablecoin that feels truly native, lightweight, private, and scalable.”
“With RGB, USDT gains a powerful new pathway on Bitcoin, reinforcing our belief in Bitcoin as the foundation of a freer financial future,” he added.
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
