Tether, the issuer of stablecoins, has decided not to proceed with its plan to freeze USDT smart contracts on five blockchains. The tokens will continue to be transferable, but they will no longer be issued or redeemed.
This updated plan affects users on Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand, as Tether announced on Friday after receiving community feedback. “Based on the input from the communities of these phased-out blockchains, Tether has adjusted its strategy and will not freeze the smart contracts on these networks.”
Users will still have the ability to transfer tokens on these networks, but Tether will stop direct issuance and redemption for them. “This means the tokens will no longer receive the same official support as other Tether tokens.” The original plan had aimed for termination of support on September 1.
This decision aligns with Tether’s broader objective to enhance support for crypto ecosystems exhibiting significant developer activity, scalability, and user demand — without completely withdrawing from the chains it has supported for a long time. Only a few smart contract-based layer-1 blockchains have achieved substantial user adoption and practical use cases, with Tron and Ethereum being the primary focus for Tether’s support.
Tron and Ethereum lead USDT adoption
Tron and Ethereum maintain significant USDT supply chains, with $80.9 billion and $72.4 billion in circulation, respectively, while BNB Chain follows with $6.78 billion, according to DeFiLlama data.
Solana and Ethereum layer-2 chains like Arbitrum and Base are also notable crypto ecosystems engaging in substantial stablecoin activity, albeit mostly utilizing Circle’s USDC instead of USDT.
Omni Layer to be most affected
An examination of USDT balances across the impacted blockchains indicates that Omni Layer will bear the brunt of the changes, holding a net circulation of $82.9 million USDT, whereas other networks show lesser participation: EOS with $4.2 million and Bitcoin Cash SLP, Algorand, and Kusama each below $1 million in USDT.
Tether’s move to phase out support for these blockchains has been in planning for two years. In August 2023, the company revealed it would halt issuance of USDT on Omni Layer, Kusama, and Bitcoin Cash SLP. By June 2024, Tether ceased minting on EOS and Algorand.
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The total market capitalization for stablecoins currently stands at $285.9 billion, led by USDT and USDC, valued at $167.4 billion and $71.5 billion respectively, according to CoinGecko data.
Stablecoin market set to strengthen in years to come
Last month, U.S. President Donald Trump implemented the GENIUS Act, which analysts believe will enhance the dominance of the U.S. dollar by encouraging stablecoins tied to the dollar, challenging other currencies, and bolstering the dollar’s status as the leading reserve currency globally.
The U.S. Department of the Treasury projects the stablecoin market may expand to $2 trillion by 2028.
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