The dominance of Tether's USDT in the digital finance world is undeniable. As stablecoins take center stage in global digital finance, one token not only leads the market but also sparks controversy: Tether's USDT. Despite ongoing debates about transparency and regulatory compliance, USDT has quietly become the world's most widely used digital dollar. Its position reflects the undeniable dominance of Tether's stablecoin.
A landmark report by Artemis, Castle Island Ventures, and Dragonfly estimates that between January 2023 and February 2025, 31 companies processed up to $94.2 billion in real-world stablecoin payments. Nearly 90% of these transactions flowed through USDT. These aren't speculative trades or DeFi fund loops—they represent real commercial activities: B2B settlements, P2P remittances, card-linked spending, and payroll payments.
This reflects a fundamental shift: regulators may now need USDT more than Tether does.
The Digital Dollar They Never Planned
In many parts of the world, Tether isn't just a crypto asset—it's a currency. From Nigeria to Colombia, Turkey to the Philippines, and Lebanon to its diaspora communities, USDT is used to hedge against inflation, settle cross-border invoices, and send money to families. In countries with unstable currencies, capital controls, or collapsed banking systems, Tether fills gaps traditional finance never could.
It achieves this not by partnering with licensed banks or central banks but through decentralized channels, primarily the Tron network, which offers near-zero transaction fees and instant transfers.
According to the same Artemis-led report, the Tron network dominates stablecoin transfers, especially for USDT, with most of its off-chain real-world transaction volume settled via Tron. This directly demonstrates Tether's stablecoin dominance in markets craving frictionless transfers.
While USDC and other regulated stablecoins chose rigorous compliance paths, Tether targeted areas with the strongest demand, moving quickly, expanding faster, and building influence without waiting for approvals. Despite attracting significant regulatory pressure, USDT is now deeply embedded in global financial structures.
The UAE Case: Recognition Without Embrace
By late 2024, the Abu Dhabi Global Market (ADGM) recognized USDT as an "accepted virtual asset," but only on the Ethereum, Solana, and Avalanche networks. Notably, it excluded USDT on the Tron network—despite Tron being Tether's primary issuance network and the backbone of its global transaction volume.
This exclusion wasn't merely technical; it was regulatory. ADGM's decision to omit Tron reflected deeper concerns about the network's compliance stance and transparency. Ironically, Tron is the very chain enabling USDT's mass adoption and reinforcing Tether's global dominance, especially in cross-border commerce.
Here’s the key distinction: ADGM's recognition allows virtual asset service providers (VASPs) to offer USDT for trading and investment—but not necessarily for payments.
To be legally used for payments within the UAE, any foreign-issued stablecoin must register with the UAE Central Bank under the Payment Token Services Regulation. This framework creates a pathway for foreign issuers like Tether to register, share whitepapers and off-chain data, and gain payment-use approval.
As of June 2025, Tether hasn’t publicly registered under this framework.
This means USDT is currently only available for investment purposes in the UAE—not for merchant payments, salary transfers, or other domestic payment uses.
In August 2024, Tether announced a partnership with Phoenix Group to issue a stablecoin pegged to the UAE dirham. However, according to sources close to the matter, this collaboration never materialized. Tether is still seeking local partners, while UAE banks remain hesitant—likely due to compliance risks and scrutiny from global regulators.
Legal Gray Area: Should UAE Exchanges Delist USDT?
All licensed exchanges in the UAE—including those regulated by ADGM and the Dubai Virtual Assets Regulatory Authority (VARA)—currently list USDT. They allow users to trade, hold, and exchange USDT like other crypto assets. Given USDT isn’t registered with the central bank, should it be delisted?
The answer lies in regulatory nuance.
Under current rules:
- Foreign-issued stablecoins can be offered for investment without registration.
- They cannot be used for payments unless the issuer registers.
Thus, exchanges offering USDT for investment purposes are compliant. But if any platform enables USDT for payment operations—such as merchant plugins, remittance channels, or payroll integrations—they violate UAE law.
Currently, UAE regulators seem to tolerate USDT’s presence in trading venues, provided payment functionalities aren’t enabled. But this stance is precarious.
BIS Joins the Conversation
On June 24, 2025, the Bank for International Settlements (BIS) issued its starkest warning yet about stablecoins. In its report, the BIS labeled stablecoins as "an unsound form of money," claiming they fail to fulfill key monetary functions like uniformity, resilience, and integrity. It specifically highlighted transparency concerns, pointing to Tether’s reserve operations, and warned that mass liquidation of backing assets could trigger financial instability.
But beneath the warning lies a deeper truth: central banks feel threatened. In countries where fiat currencies fail, banking infrastructure is weak, or remittance costs are high, USDT has become the de facto digital dollar. The BIS fears what it can’t control—and stablecoins, especially Tether, have already outpaced institutional oversight.
This reaction underscores that the real challenge isn’t regulation but relevance. Stablecoins are now monetary lifelines for the unbanked and underbanked. Even as central banks push CBDCs and unified ledgers, they’re playing catch-up to an existing reality.
This deepens a contradiction at the core of global finance: people have already embraced Tether. Now regulators—even the BIS—must decide whether to collaborate, compete, or attempt to exclude it entirely.
Deepening Contradictions
Tether remains unlicensed in many jurisdictions. Yet it’s the backbone of stablecoin commerce. It’s the digital dollar of choice for millions. Even in countries like the UAE with clear regulations, it occupies a legal gray area—traded but not fully accepted, indispensable but not wholly endorsed.
For regulators, this is the challenge: you can craft policies, issue licenses, and build alternatives. But until better solutions emerge, USDT will keep doing what others can’t.
And that’s the uncomfortable truth: in today’s global financial restructuring, regulators may need Tether more than Tether needs them—a testament to its dominance in the digital currency world.
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FAQs
Is USDT legal in the UAE?
Yes, USDT is recognized as a virtual asset for investment purposes but isn’t approved for payments unless registered with the UAE Central Bank.
Why does Tron-based USDT face restrictions in the UAE?
The UAE excludes Tron-based USDT due to regulatory concerns about the network’s transparency and compliance standards, despite its popularity.
Can businesses in the UAE accept USDT as payment?
No, unless the issuer registers with the UAE Central Bank under the Payment Token Services Regulation.
What’s the future of stablecoins like USDT in regulated markets?
Stablecoins will likely face stricter oversight but may integrate into formal financial systems if they meet compliance requirements.