TLDR
- Tether announced integration of USDT with Bitcoin’s base layer and Lightning Network, enabling faster transactions and new payment possibilities using Taproot Assets protocol
- The integration combines Bitcoin’s security with Lightning Network’s speed, allowing seamless operation across both networks while reducing transaction costs
- Tether currently dominates the $220 billion stablecoin market with $139.4 billion market cap, processing over $10 trillion in on-chain volume in 2024
- The announcement was made at Plan B conference in El Salvador, where Tether recently relocated, though El Salvador just amended its Bitcoin Law to make merchant acceptance optional
- The move aims to enhance Bitcoin’s scalability and expand Layer 2 adoption while providing practical solutions for remittances and payments
Tether, the world’s largest stablecoin issuer, announced on January 30, 2025, that it will integrate its USDT stablecoin with Bitcoin’s base layer and Lightning Network. The announcement came during the Plan B conference in El Salvador, marking a major development in the stablecoin’s expansion beyond traditional blockchain networks.
The integration will use Taproot Assets, a protocol developed by Lightning Labs that enables asset issuance on Bitcoin’s base layer while allowing transactions to settle on the Lightning Network. This protocol, released in 2023, creates a bridge for stablecoins and other digital assets to utilize Bitcoin’s infrastructure.
Today we’re announcing that Tether is coming to bitcoin and Lightning! 💸⚡
With the security and decentralization of bitcoin and the speed and scalability of Lightning, USDT will bring hundreds of millions of users and trillions in volume.
It all comes back to bitcoin. pic.twitter.com/Hp6qQCpAVl
— Lightning Labs⚡️🌐 (@lightning) January 30, 2025
USDT’s integration aims to make micropayments more efficient and reduce transaction costs. Once fully implemented, users will be able to conduct USDT transactions across both Bitcoin’s main chain and its Lightning-powered layer 2 network, combining the security features of Bitcoin with the fast transaction speeds of Lightning.
Tether CEO Paolo Ardoino explained the practical implications of the integration.
“We’re focusing on real-world financial applications,” he stated.
“Our goal is to provide practical solutions for remittances, payments, and other financial applications that need both speed and reliability.”
Lightning Labs CEO Elizabeth Stark emphasized the broader reach of this integration. “Millions of people will now be able to use the most open, secure blockchain to send dollars globally,” she noted. The company developed the Taproot Assets protocol that makes this integration possible.
The move comes at a time when Tether maintains a dominant position in the stablecoin market. Current data shows USDT has a market capitalization of $139.4 billion, almost triple that of its nearest competitor, USD Coin (USDC), which stands at $53.1 billion.
The scale of Tether’s operations becomes clear when looking at transaction volumes. In 2024, USDT processed more than $10 trillion in on-chain volume, approaching Visa’s annual payment volume of $16 trillion. These numbers demonstrate the growing adoption of stablecoins in global financial transactions.
The announcement follows Tether’s recent relocation to El Salvador, the first country to adopt Bitcoin as legal tender. However, the timing coincides with changes in El Salvador’s crypto policies. On the same day as Tether’s announcement, the country’s Legislative Assembly modified its Bitcoin Law.
The amendment to El Salvador’s Bitcoin Law now makes merchant acceptance of Bitcoin optional rather than mandatory. This change aligns with conditions set by the International Monetary Fund for a $1.4 billion loan to support El Salvador’s economy.
The integration aims to expand Bitcoin’s Layer-2 capabilities and could impact its competition with other blockchain networks. The combination of Bitcoin’s security features and Lightning Network’s speed creates new possibilities for payment systems and cross-border transactions.
Market analysts suggest the Lightning Network could play a role in powering artificial intelligence agents, potentially serving as a medium of exchange for Bitcoin transactions. This adds another dimension to the potential applications of the integrated system.
The technical implementation will allow USDT to function across both networks, enabling high-speed, low-cost transactions. This creates opportunities for microtransactions, remittances, and streamlined cross-border settlements while maintaining Bitcoin’s decentralized structure.
Tether’s move comes amid ongoing discussions about stablecoin regulation and reserve management. The company has faced scrutiny over its reserve holdings but maintains transparency about its treasury holdings and reserve management practices.
Recent developments in Europe have presented challenges for Tether, with some exchanges delisting USDT as new regulatory frameworks take effect. This partly influenced the company’s decision to relocate to El Salvador’s more crypto-friendly environment.
The integration will leverage Taproot assets to expand Bitcoin’s functionality while supporting tokenized assets like USDT. This approach aims to preserve the network’s decentralized integrity while enabling new payment solutions.