Author: Walid Abou Zaki

Translation: BlockWeeks Weekly

As stablecoins take center stage in global digital finance, one token not only dominates the market but is also highly controversial: Tether's USDT. Despite ongoing debates about transparency and regulatory compliance, USDT has quietly become the most widely used digital dollar in the world. Its status reflects the undeniable dominance of Tether's stablecoin.

A landmark report released 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 transactions are not speculative trades or DeFi funding loops. They represent real business 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 For

In many parts of the world, Tether is not a cryptocurrency asset. It is a currency. From Nigeria to Colombia, from Turkey to the Philippines, from Lebanon to its overseas expatriate communities, USDT is used to hedge against inflation, settle cross-border invoices, and send remittances to family. In countries where currencies are unstable, capital controls exist, or banking systems have collapsed, Tether fills a gap that traditional finance has never been able to address.

It achieves this not by partnering with licensed banks or central banks, but through a decentralized network, primarily the Tron blockchain, which offers near-zero transaction fees and instant transfers.

According to the same report led by Artemis, the Tron blockchain is the dominant blockchain for stablecoin transfers, particularly for USDT, with most of its offline real transaction volume settled through Tron. This directly indicates the performance of Tether's stablecoin dominance in markets that most need frictionless transfers.

While USDC and other regulated stablecoins choose a robust compliance path, Tether opts for the places with the strongest demand, acts quickly, expands faster, and builds influence without waiting for approval. Despite facing significant regulatory pressure, USDT is now deeply embedded in the global financial structure.

UAE** Case: Recognized but Not Embraced**

By the end of 2024, the Abu Dhabi Global Market (ADGM) recognized USDT as an "approved virtual asset," but only for circulation on Ethereum, Solana, and Avalanche networks. Notably, it excluded USDT on the Tron blockchain, despite Tron being Tether's primary issuance network and a pillar of its global trading volume.

This exclusion is not merely technical; it is regulatory. ADGM's decision to exclude Tron reflects deeper concerns about the network's compliance stance and transparency. Ironically, Tron is precisely the chain that has facilitated the large-scale application of USDT, reinforcing Tether's global dominance especially in cross-border commerce.

This is a critical distinction. ADGM's recognition allows virtual asset service providers (VASPs) to offer USDT for trading and investment, but it does not necessarily permit it for payments.

To be legally used for payments within the UAE, any foreign-issued stablecoin must be registered with the Central Bank of the UAE under the Payment Token Services Regulations. This regulation creates a pathway for foreign issuers like Tether to register, share white papers and off-chain data, and obtain payment use licenses.

As of June 2025, Tether has not publicly registered with the Central Bank of the UAE under this framework.

This means that currently, USDT can only be used for investment purposes in the UAE, and cannot be used for merchant payments, payroll transfers, or other domestic payment purposes.

In August 2024, Tether announced a partnership with Phoenix Group to issue a stablecoin pegged to the UAE Dirham. However, sources close to the matter revealed that the partnership never materialized. Tether is still seeking local partners, while banks in the UAE remain hesitant, likely due to compliance risks and the scrutiny involved in partnering with an entity often under the watch of 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 just like other crypto assets. Given that USDT is not registered with the Central Bank, should it be delisted?

The answer lies in the nuances of regulation.

According to current rules:

• Foreign-issued stablecoins can be offered for investment without registration.

• They cannot be used for payments unless the issuer is registered.

Therefore, exchanges providing USDT for investment purposes are compliant. However, if any platform allows USDT to be used for payment operations—such as merchant plugins, remittance channels, or payroll integrations—they would be violating UAE law.

Currently, UAE regulators seem to tolerate the presence of USDT in trading venues as long as payment functionalities are not enabled. But this situation is unstable.

Bank for International Settlements Joins the Conversation

On June 24, 2025, the Bank for International Settlements (BIS) issued its most straightforward warning regarding stablecoins to date. In its report, the BIS referred to stablecoins as "an unsound form of currency," claiming they fail to fulfill key monetary functions such as singularity, resilience, and integrity. It particularly emphasized concerns about transparency, pointing to Tether's reserve operations, and warned that large-scale liquidation of supporting assets could trigger financial instability.

But beneath the warning lies a deeper truth: central banks feel threatened. In countries where fiat currencies cannot maintain value, banking infrastructure is weak, and remittance costs are high, USDT has become the de facto digital dollar. The BIS fears something it cannot control—and stablecoins, especially Tether, have already grown beyond the reach of institutions.

This reaction indicates that the real challenge lies not in regulation but in relevance. Stablecoins have now become a monetary channel for the unbanked and underbanked. Even as central banks push for central bank digital currencies (CBDCs) and unified ledgers, they are chasing a reality that has already taken shape.

This deepens the contradiction at the core of global finance: the public has already embraced Tether. Now it is up to regulators—even the BIS—to decide whether to collaborate with it, compete against it, or attempt to exclude it entirely.

Deepening Contradictions

Tether remains unlicensed in many jurisdictions. Yet, it is the backbone of stablecoin commercial activity. It is the digital dollar of choice for millions. Even in countries like the UAE, which have clear regulations, it occupies a legal gray area—traded but not fully accepted, indispensable yet not fully recognized.

For regulators, this is the challenge: you can create policies, issue licenses, and build alternatives. But until a better solution emerges, USDT will continue to do the work that others cannot accomplish.

And this is the uncomfortable truth: in today's restructuring of the global financial landscape, it may be the regulators who need Tether more than Tether needs them—this is a testament to the dominance of Tether's stablecoin in the world of digital currency.

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