Tether’s USDT Stablecoin Goes Native on Bitcoin Blockchain with RGB Protocol

Tether’s USDT Stablecoin Goes Native on Bitcoin Blockchain with RGB Protocol

By Editorial Board • 28 August 2025

Tether’s USDT Stablecoin Goes Native on Bitcoin Blockchain with RGB Protocol

In a groundbreaking move for the cryptocurrency ecosystem, Tether, the world’s largest stablecoin issuer, has announced the launch of USDT on the Bitcoin blockchain through the RGB protocol [1]. This development, marks a significant step in expanding Bitcoin’s utility beyond its traditional role as a store of value.

RGB Protocol: A New Era for Bitcoin

The RGB protocol [2], which recently achieved mainnet status with its 0.11.1 release, enables the issuance of digital assets directly on Bitcoin’s blockchain. Designed to prioritize privacy, scalability, and user control, RGB allows assets like USDT to operate natively within Bitcoin’s infrastructure. This integration means users can now hold and transfer USDT alongside Bitcoin in the same wallet, streamlining the user experience.

Tether’s adoption of RGB introduces advanced features, such as offline transaction capabilities, offering greater flexibility and resilience for payments. According to Tether’s blog post, this move enhances the stablecoin’s functionality while leveraging Bitcoin’s unparalleled security.

How RGB Enables USDT on Bitcoin Without Smart Contracts

Bitcoin’s blockchain is renowned for its security but lacks native support for complex smart contracts, unlike platforms like Ethereum. This raises the question: how can a stablecoin like USDT operate on Bitcoin? The answer lies in RGB [3], a layer-2 solution that extends Bitcoin’s capabilities without altering its core protocol.

RGB, which stands for "Really Good Bitcoin," operates as a client-side validated state system. Instead of relying on Bitcoin’s blockchain to execute smart contracts directly, RGB uses Bitcoin’s infrastructure as a secure anchor for off-chain data and computations. Here’s how it works:

  • Client-Side Validation: RGB smart contracts are executed off-chain by the parties involved in a transaction. These contracts define the rules for asset issuance and transfer, such as USDT’s peg to the U.S. dollar.
  • Bitcoin as a Commitment Layer: RGB leverages Bitcoin’s blockchain to record cryptographic commitments (hashes) of these off-chain contracts. This ensures the integrity and immutability of the transactions without burdening Bitcoin’s main chain with additional data.
  • Privacy and Scalability: By keeping most data off-chain, RGB minimizes blockchain bloat and enhances user privacy. Only minimal data, such as transaction commitments, is stored on Bitcoin’s blockchain, while the actual asset data (e.g., USDT balances) is managed privately between users.
  • Integration with Lightning Network: RGB is compatible with Bitcoin’s Lightning Network, enabling fast, low-cost, and private transactions for USDT, further enhancing its usability for everyday payments.

This approach allows USDT to exist natively on Bitcoin’s ecosystem, bypassing the need for on-chain smart contracts while preserving Bitcoin’s security and decentralization. Users can transact USDT seamlessly, with the assurance that their transactions are anchored to Bitcoin’s robust blockchain.

A Vision for Financial Freedom

Paolo Ardoino, CEO of Tether, emphasized the significance of this launch: “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.” By embedding USDT into Bitcoin’s ecosystem, Tether aims to solidify Bitcoin’s role as the cornerstone of a decentralized global financial system.

This integration could have far-reaching implications, particularly for the billions of users worldwide who rely on stablecoins for everyday transactions. The combination of Bitcoin’s robust security and Tether’s price stability creates a compelling case for accessible, reliable digital money.

Tether’s Strategic Moves

Beyond the RGB integration, Tether has been making strategic investments to expand its influence. Earlier this month, the company acquired a minority stake in Bit2Me [4], a Spanish cryptocurrency platform, while also leading a €30 million ($35 million) funding round to fuel Bit2Me’s growth in Europe and Latin America. This investment underscores Tether’s commitment to fostering innovation and adoption in the crypto space.

Stablecoin Market Trends

Data from CryptoQuant highlights the continued growth of stablecoin liquidity, though the pace has slowed. Weekly stablecoin market cap expansions have dropped to $1.1 billion, compared to $4–8 billion in late 2024, which fueled Bitcoin’s rally. USDT’s 60-day growth has also moderated to $10 billion, down from peaks above $21 billion earlier this year. Despite this cooling trend, stablecoin reserves remain at record highs, signaling sustained interest in digital assets.

What’s Next for Tether and Bitcoin?

Tether’s integration of USDT into Bitcoin’s blockchain via RGB is a bold step toward bridging the gap between Bitcoin’s security and the practical utility of stablecoins. By leveraging RGB’s innovative approach, Tether has overcome the limitations of Bitcoin’s lack of native smart contract functionality, paving the way for more advanced use cases. As the crypto market evolves, this development could position Bitcoin as a versatile foundation for decentralized finance.

References

[1]: https://tether.io/news/tether-to-launch-usdt-on-rgb-expanding-native-bitcoin-stablecoin-support/

[2]: https://docs.rgb.info/

[3]: https://trustmachines.co/learn/what-is-the-rgb-protocol-on-bitcoin/

[4]: https://tether.io/news/tether-acquires-minority-stake-in-bit2me-and-leads-e30-million-funding-round/