Tether Reverses USDT Token Freeze Decision on Five Blockchains

TLDR

• Tether will allow USDT transfers on five legacy blockchains.
• Omni Layer USDT accounts for $82.9 million in market cap.
• No new USDT issuance on affected blockchains after community input.

Tether Holdings Limited has retracted its initial decision to freeze USDT tokens on five blockchains due to community feedback. The decision affects the Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand networks. The company will cease issuance and redemption but allow transfers on these networks to continue. Tether, the world’s largest stablecoin issuer by market cap, made the announcement following input from the community and stakeholders involved with these blockchains.

This decision highlights Tether’s responsiveness to user feedback. The company reversed its plan to freeze the tokens after considering opinions from the communities of these blockchains. The affected USDT tokens will no longer be officially supported like other Tether tokens, but transfers will still be possible.

Details of the Affected Blockchains

The blockchains involved in this update include the Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand. These are referred to as legacy chains due to lower activity and volume compared to others like Ethereum and Tron. Presently, Omni Layer accounts for about $82.9 million USDT, noticeably less than Tron and Ethereum, which hold $80.9 billion and $72.4 billion, respectively.

Though these blockchains will no longer see new USDT issuance or redemption, transfers remain feasible. This move reallocates Tether’s resources to blockchains with higher transaction volumes and user adoption, such as Ethereum and Tron. Transfers on legacy blockchains continue, easing concerns over potential disruptive shifts in market liquidity.

Tether’s Strategy and Community Feedback

The strategy reflects a shift towards more actively utilized and developed blockchains. Paolo Ardoino, Tether’s CEO, is known for navigating the company through significant migrations and transparency initiatives. This approach intends to strengthen Tether’s presence on platforms that dominate the USDT supply market.

Tether cited direct feedback from the blockchains’ communities as a significant influence in their decision to revise the plan. There are no new grants or institutional investments linked to this decision, illustrating a focus on aligning their operations with the demands of an evolving market environment.

Implications for Related Cryptocurrencies

The decision directly affects USDT tokens on Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand. These networks will no longer receive new USDT issuance, although USDT on Ethereum and Tron will remain unaffected, preserving market stability for these major platforms. Broader market impacts are anticipated to be minimal, as these legacy blockchains represent only a small fraction of USDT liquidity.

The transition is unlikely to lead to immediate widespread effects on other stablecoin or DeFi markets. Users are expected to consolidate their holdings onto active blockchains, thereby reinforcing the liquidity and usability of platforms like Ethereum and Tron. Historical precedents have shown similar migrations tend to refocus market activity without losing Tether’s market share.