Author: Bitcoin Magazine

Translated by: Shenchao TechFlow

Shenchao Introduction: USDT is being natively issued on Bitcoin through the RGB protocol, marking the first real return since 2014. The new solution supports instant settlement via the Lightning Network, and the UTXO model provides natural privacy protection, with fees and slippage far lower than public chains like Tron. If successful, it could reshape the stablecoin landscape. Their logic is simple: after all, the main funds in the crypto market are in Bitcoin and USDT; why go around buying TRX to pay fees?

Tether is preparing to natively issue USDT on Bitcoin through RGB protocol version 0.11.1. Deployed by UTEXO Software Lab, USDT will return to the chain that was first issued through the Omni-Mastercoin layer in 2014.

UTEXO is the company leading this commercial deployment and has positioned itself as the issuer and distributor of Bitcoin native USDT in collaboration with Tether. "After eight years of development, we are finally the company issuing USDT on Bitcoin with strong support from Tether," said Viktor Ihnatiuk, co-founder of UTEXO, in an exclusive interview with Bitcoin Magazine.

The RGB protocol combines its unique client validation with the Lightning Network to enable instant, private settlements while anchoring security to Bitcoin's UTXO model. Users can handle USDT on Bitcoin native addresses and send/receive it over the Lightning Network through compatible wallets.

The RGB protocol on Bitcoin also provides important privacy features for USDT users, as the asset benefits from Bitcoin's UTXO model—this model standardizes the use of new addresses for each transaction, unlike the common account model of EVM blockchains like Tron, Ethereum, or Solana that reuse addresses. Address reuse is the primary mistake for on-chain privacy, yet many altcoins still build interfaces that reuse addresses, despite the risks to users. Integration of RGB with the Lightning Network moves USDT through an off-chain payment network, further protecting user privacy and leaving almost no trace on public blockchains. Deep integration with Tether also means fewer intermediaries that charge extra fees or collect data.

On this topic, Viktor emphasized: "We built Utexo to enable USDT to flow on Bitcoin in the way currency should: instant, private, no surprise costs. Our partners only need to integrate the API once to route USDT over the most resilient open network ever and have full control over the cost structure."

UTEXO vs. Tron

UTEXO originated from the joint venture of Viktor's Boosty Venture Studio, Fulgur Ventures, and Tether Investments. The goal is straightforward: to push RGB to the mainnet after years of delays from previous development teams. The protocol has been actively developed at least since 2016 but failed to catch up with the 2017 bull market, leading to Tron dominating USDT transaction volumes and usage in developing countries, a status that remains today.

UTEXO has specifically built the "last mile" software needed for the widespread deployment of USDT in the Bitcoin ecosystem, including software development kits, APIs, middleware protocols, UI design work, and even the minting bridge that launched today at mint.utexo.com. This bridge allows users to move USDT between popular blockchains with "low-deterministic fees" and no intermediaries, thanks to its direct integration with Tether as the primary minting party. The RGB protocol layer is developed by Bitfinex strategy researcher Federico Tenga.

"Now if you want to exchange USDT for Bitcoin, you have to pay high fees for all these wallets—they charge a 1% wallet fee, plus more than 1% from exchange providers, on top of 1% slippage, so you end up paying 3% and have to wait a long time to complete the exchange," Viktor told Bitcoin Magazine, adding: "With USDT and Bitcoin on the Lightning Network, for the first time, you have two major assets on one chain that you can exchange instantly with no slippage. You can decentralizedly exchange USDT for Bitcoin on-chain and back again. The price is almost the same as Binance's spot market."

Networks like Tron, primarily used to transfer USDT, also add additional fees, exchange commissions, and friction to the user experience. They require different types of addresses, using assets like TRX to pay fees, while TRX is only used for transferring stablecoins. Since most monetary volume in the crypto market is concentrated in Bitcoin and Tether, having to buy altcoins to pay fees ultimately feels like red tape.

Using Bitcoin as the payment rail for USDT also brings blockchain-level security that other chains cannot provide. While USDT has always been fundamentally centralized due to Tether, the rail can also increase risks, such as if a controversial fork occurs or significant vulnerabilities are discovered in a new blockchain system. Bitcoin, as the oldest and most conservative blockchain, offers a quality assurance unmatched by other chains.

The roots of RGB can be traced back to Peter Todd's proposal for a single-use sealing in 2014, formalized in 2016 by Giacomo Zucco and Riccardo Casatta. The abbreviation RGB originally stemmed from "Riccardo Giacomo Bitcoin," later renamed to "Really Good Bitcoin." Tether had explored the protocol early on but was hindered by delays from the previous team. If RGB had been delivered as planned around 2019, the stablecoin landscape and the broader DeFi industry might have developed around Bitcoin's UTXO model instead of Ethereum's account model.

Thus, bringing USDT back to Bitcoin is UTEXO's core motivation. Viktor is unapologetic about it: "After eight or nine years, USDT is finally coming home. We cannot afford to fail. If we fail, no one will use Bitcoin as a settlement layer anymore."

USDT issued via RGB on Bitcoin is expected to launch in a few weeks, possibly this July, with wallets including Tether Wallet announcing support, and global exchanges also announcing integration.