Tether is not planning to build a blockchain, says CEO Paolo Ardoino

Tether CEO Paolo Ardoino shut down rumors of a Tether blockchain, declaring, “Tether is not planning to build an official blockchain at this time.”

Instead, Tether backs the integration of its stablecoin, USDT, on various networks to support decentralized use cases, like gas fees, on independent Layer 2 (L2) solutions.

Tether’s stance on neutrality guides this decision, with its motto, “Unstoppable TogETHER,” signaling a preference for working with other projects instead of consolidating control.

The rumor mill around a potential Tether chain is fed by the company’s dominance and ongoing attention from regulators. But Ardoino added that:

“Any product / announcement done this coming week would end up likely obliterated by the election noise. Gotta push back new product release by 7 days.”

Tether’s market dominance and scrutiny

USDT is the largest stablecoin by market cap, pegged to the US dollar and valued at over $118 billion as of press time. It controls roughly 75% of the stablecoin market, cementing its role as the primary fiat gateway in the crypto ecosystem.

USDT lets traders move in and out of crypto quickly on various exchanges, creating a bridge between digital assets and fiat money.

Tether’s expansion into different networks fueled the blockchain rumors. Recently, Tether launched USDT on The Open Network (TON), pushing its supply on TON to over $1 billion shortly after.

Regulatory scrutiny has kept Tether in the spotlight, with investigations probing potential involvement in money laundering and sanctions violations. These probes are causing waves in the market. Tether’s reserve backing and transparency have come under fire.

USDT itself briefly dipped below its dollar peg when news of the investigations broke, a reaction that underscores market sensitivity to anything tied to Tether.

Tether’s transparency issues aren’t new, either. Its last full audit happened back in 2021, leaving investors wary of its financial health. Critics like Justin Bons, founder of Cyber Capital, call Tether a “scam,” accusing it of lacking sufficient reserve backing and comparing it to “printing counterfeit money.”

Market chatter around Tether’s governance—whether it would benefit from a more transparent structure, like its own chain—has grown louder. But Tether sticks to its “no blockchain” stance, regardless of external pressure.

Ripple’s CEO went as far as predicting a “Black Swan event” tied to Tether’s regulatory troubles, hinting at potential fallout if Tether doesn’t address transparency issues.

Amid these speculations, industry voices question if a Tether blockchain could address compliance and make Tether’s operations less opaque. But so far, Tether refuses to entertain the idea.

Response to manipulation accusations

Tether has faced waves of accusations that USDT is used to manipulate crypto prices, particularly Bitcoin. The company has responded to these claims by calling them “reckless and false.”

According to Tether, the idea that USDT is issued to inflate prices reveals a lack of understanding about the stablecoin’s role in the market. Tether’s general counsel argues that such allegations fail to grasp the basic dynamics of how USDT interacts with crypto markets.

Academic studies fuel some of this criticism, with one high-profile paper by John M. Griffin and Amin Shams suggesting that Tether’s issuances drive Bitcoin prices. Tether fired back, calling the study “fundamentally flawed.”

The company claims the authors relied on limited and cherry-picked data, lacking accurate transaction details and exchange flows, which skewed their conclusions. Tether argues that the patterns could just as easily represent legitimate purchases as unbacked issuances.

Tether maintains that every USDT token is fully backed by reserves, issued based on market demand rather than for price manipulation. They emphasize that USDT’s issuance reflects utility and acceptance across exchanges, not attempts to meddle with prices.

In legal battles, Tether and Bitfinex, its affiliated exchange, argue that the accusations against them lack evidence. Plaintiffs alleging coordinated price inflation through USDT haven’t shown enough proof, according to Tether’s legal team.

Tether insists that USDT’s growth and issuance levels mirror its utility and demand in the market—not any behind-the-scenes manipulation.