Tether brings stablecoin to Bitcoin via Lightning Network

Tether announced the expansion of its stablecoin’s reach to the Bitcoin network through the Lightning Network, a layer 2 scaling solution. This development was revealed by Tether CEO Paolo Ardoino and Lightning Labs CEO Elizabeth Stark at the Plan B conference in San Salvador, El Salvador, on January 30.

Tether, the leading stablecoin by market capitalization, is set to leverage the Taproot Assets protocol, which enhances Bitcoin’s functionality to support tokenized assets. Lightning Labs, the entity behind the Lightning Network, has developed the technology to facilitate this integration.

With a significant market cap of $139.4 billion, Tether’s USDT is nearly three times the size of its nearest competitor, Circle’s USD Coin, which has a market cap of $53.1 billion. In 2024, Tether processed a staggering $10 trillion in transactions, approaching Visa (NYSE:V)’s $16 trillion volume. The stablecoin is managed across more than ten blockchains, such as Ethereum, Tron, Solana, and Avalanche.

The integration with the Lightning Network is expected to enable merchants who accept Bitcoin to also offer USDT as a payment option, utilizing the same infrastructure. Elizabeth Stark of Lightning Labs stated that this move would allow "millions of people to use the most open, secure blockchain to send dollars globally." She also emphasized the benefit for users in emerging markets, who often use stablecoins as a hedge against local currency devaluation.

Lightning Labs anticipates that the integration will not only facilitate USDT micropayments on Lightning but also support transactions between artificial intelligence agents and autonomous vehicles in the future.

Earlier this month, Tether relocated its operations to El Salvador, which is currently the only nation where Bitcoin is legal tender. El Salvador introduced the Bitcoin Lightning Network-supported Chivo Wallet to its citizens in September 2021 and initially required merchants to accept Bitcoin. However, as part of a $1.4 billion loan agreement with the International Monetary Fund, the country has since made Bitcoin payments voluntary for merchants.

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