Does Tether’s recent minting of $1 billion USDT mean the crypto payment revolution is finally here?
On October 14, 2025, Tether’s decision to mint additional USDT on the Ethereum blockchain created ripples throughout the cryptocurrency market. This minting, amounting to another $1 billion dollars, indicates a significant liquidity update.
Is this a sign that the crypto payment revolution is finally upon us, or are there hidden downsides?
How does this minting change the crypto landscape?
The minting of this USDT has broader implications for the cryptocurrency landscape. It is estimated that Tether has minted about $11 billion in new USDT just this month. It is unclear who is on the receiving end of these new USDT coins, but one thing is certain: the minting will drastically affect trading volumes and price.
In a volatile market, analysts have noted that support for crypto prices usually comes from large players entering the market. A few weeks ago, both Bitcoin (BTC) and Ethereum (ETH) saw their prices drop sharply. This mass minting may act as the market prepared for the incoming liquidity to hit exchanges.
It is also no secret that DeFi relies on stablecoins. The liquidity is needed for decentralized finance to function properly. But will Tether be able to maintain their dollar peg in such a destructive environment?
What is the risk of relying on Tether?
Fintech companies across Asia had better be prepared for a major risk factor when it comes to relying on Tether for their liquidity.
Firstly, there are liquidity and reserve risks. Tether is known for having a reserve that is largely held in US Treasuries, which are liquid, but that can also see wild swings in interest rates. An unexpected spike in USDT redemptions could place Tether in a precarious position if they're forced to liquidate under duress. If Tether has losses in its non-Treasury assets, it could further impact liquidity.
If that isn't enough, there are also regulatory and compliance risks, as Tether has been placed under immense scrutiny in Asia and across the globe for its past involvement in money laundering and financial crime.
These two risks are even before we get into market and peg stability. The market is subject to severe stress where the peg could break, but Tether has maintained it thus far.
And lastly, there's the banking and custody risk. Tether has relied heavily on a small number of banking partners, and if there was a banking crisis or a regulatory freeze, the startup could feel the effects. There’s no denying Tether’s growth, but its past gives concern for the future.
What does this mean for stablecoins and compliance?
Tether's recent minting of $1 billion in USDT doesn't change the regulatory landscape for stablecoins in Europe, but it does shed light on compliance challenges.
The Markets in Crypto-Assets (MiCA) regulations are set to take effect in June 2024, imposing strict requirements on stablecoin issuers. These include maintaining reserves and obtaining legal recognition as e-money institutions. The lack of compliance from Tether could lead to delisting from European exchanges.
Despite the challenges, Tether seeks to meet the rising demand for stablecoins and enhance liquidity across crypto exchanges, reinforcing the need for alternative options in the face of regulatory scrutiny.
Are there stablecoin alternatives available to SMEs?
Small and medium-sized enterprises (SMEs) looking to integrate cryptocurrency without the risks associated with Tether have several attractive options.
One of the best options is USD Coin (USDC). They boast transparency and regulatory compliance. They’ve consistently been backed by U.S. dollars held in reserve.
Another option is Binance USD (BUSD). This stablecoin is guaranteed by Binance and fully backed by U.S. dollars.
Lastly, there is TrueUSD (TUSD) and Pax Dollar (USDP). Both of these are fiat-collateralized stablecoins that offer transparency and regulatory compliance.
Gemini Dollar (GUSD) is yet another stablecoin issued by the Gemini exchange.
These alternatives provide similar fiat-collateralization while also offering a more transparent and regulated option compared to Tether.
Can Tether's minting lead to backlash against stablecoins?
It is possible that Tether’s minting practices could lead to a backlash against stablecoins in the crypto community.
Concerns about transparency and reserve backing have mounted. The rapid minting of USDT has intensified scrutiny over whether Tether is maintaining sufficient reserves to back each token. Any perceived shortfall could erode trust in Tether and the stablecoin sector as a whole.
There are also ongoing debates about whether large-scale minting is being used to inflate crypto prices. If the market perceives that stablecoin issuers can influence prices through token creation, it could damage the credibility of stablecoins.
Tether's decision to end support for USDT on certain blockchains highlights inherent risks in relying on a single issuer. This fragility may push the community toward more decentralized alternatives.
In summary, it remains to be seen whether Tether's minting practices will support liquidity and trading activity, or amplify risks related to transparency, market manipulation, and regulatory scrutiny.
