Stablecoins have cemented their role at the heart of global digital finance, and among them, one stands out not only for dominance but also for 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 widespread adoption reflects an undeniable reality—Tether’s stablecoin dominance.
A landmark report from 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 weren’t speculative trades or DeFi loops—they represented real economic activity: B2B settlements, peer-to-peer remittances, card-linked spending, and payroll disbursements.
This shift reveals a profound truth: regulators may now need USDT more than Tether itself does.
The Unplanned Digital Dollar
In many parts of the world, Tether isn’t just a crypto asset—it functions as currency. From Nigeria to Colombia, Turkey to the Philippines, Lebanon to its diaspora communities abroad, USDT is used to hedge against inflation, settle cross-border invoices, and send money home. In countries plagued by unstable currencies, capital controls, or failing banking systems, Tether fills a void traditional finance has long ignored.
And it achieves this not through partnerships with licensed banks or central institutions, but via decentralized networks—primarily the Tron blockchain, which offers near-zero fees and instant transfers.
According to the same Artemis-led report, Tron dominates stablecoin transaction volume globally, especially for USDT. Most real-world off-chain USDT transactions are settled on Tron. This underscores how Tether’s stablecoin dominance manifests most strongly in markets where frictionless money movement is essential.
While USDC and other regulated stablecoins pursue cautious compliance paths, Tether has moved swiftly into regions with the highest demand, scaling rapidly without waiting for approval. Despite drawing significant regulatory scrutiny, USDT is now deeply embedded in the fabric of global finance.
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The UAE Case: Recognition Without Endorsement
In late 2024, Abu Dhabi Global Market (ADGM) recognized USDT as a “recognized virtual asset”—but only when issued on Ethereum, Solana, and Avalanche networks. Notably, it excluded USDT on the Tron blockchain, despite Tron being Tether’s primary issuance network and the backbone of its global transaction volume.
This exclusion is not merely technical—it's regulatory. ADGM’s decision reflects deeper concerns about Tron’s compliance posture and transparency. Ironically, it is precisely this network that enables USDT’s mass real-world utility and reinforces Tether’s global stablecoin leadership, particularly in cross-border commerce.
There’s a critical distinction here: 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 under the Central Bank of the UAE’s Payment Token Services Regulation. This framework allows issuers like Tether to register, submit whitepapers and off-chain data, and obtain permission for payment use.
As of June 2025, Tether has not publicly registered under this regime.
This means USDT can currently only be used for investment purposes in the UAE—not for merchant payments, salary transfers, or domestic transactions.
In August 2024, Tether announced a partnership with Phoenix Group to launch a UAE dirham-pegged stablecoin. However, sources close to the matter confirm the collaboration never materialized. Tether continues searching for local partners, while UAE banks remain hesitant—likely due to compliance risks and reputational concerns tied to working with an entity under constant global regulatory scrutiny.
Navigating the Legal Gray Zone: Should UAE Exchanges Delist USDT?
All licensed exchanges in the UAE—including those regulated by ADGM and Dubai’s Virtual Assets Regulatory Authority (VARA)—currently list USDT. They allow users to trade, hold, and convert it like any other cryptocurrency. Given that 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 is registered.
Therefore, exchanges offering USDT solely for investment are compliant. However, any platform enabling payment functions—such as merchant plugins, remittance channels, or payroll integrations—would violate UAE law.
At present, regulators appear to tolerate USDT’s presence on trading platforms—as long as payment functionality remains disabled. But this arrangement is fragile and subject to change.
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Frequently Asked Questions
Q: Is USDT legal in the UAE?
A: Yes—but with limits. USDT is recognized as a virtual asset for investment purposes in jurisdictions like ADGM. However, it is not approved for use in payments unless issued or registered under the Central Bank of the UAE’s Payment Token Services Regulation.
Q: Can I use USDT to pay for goods or services in the UAE?
A: Not legally. While individuals may privately transact using USDT, businesses accepting it as payment operate outside current regulatory frameworks and risk non-compliance.
Q: Why did ADGM exclude Tron-based USDT?
A: Due to concerns over Tron’s regulatory compliance and transparency standards. Despite its high transaction volume, Tron lacks the oversight mechanisms preferred by financial regulators.
Q: Has Tether applied to register in the UAE?
A: As of mid-2025, there is no public record of Tether registering under the UAE Central Bank’s payment token framework.
Q: Could USDT be banned in the UAE?
A: A full ban is unlikely given its market role, but restrictions on usage—especially for payments—could tighten if regulatory gaps persist.
Q: What alternatives exist to USDT in the UAE?
A: Regulated stablecoins like USDC are gaining traction. Additionally, several local initiatives are exploring dirham-pegged digital currencies compliant with national regulations.
The BIS Speaks: A Warning from Global Financial Watchdogs
On June 24, 2025, the Bank for International Settlements (BIS) issued its clearest warning yet on stablecoins. In a comprehensive report, BIS labeled stablecoins as “an unsound form of money,” arguing they fail core monetary functions like uniformity, resilience, and integrity. It spotlighted transparency issues—particularly around Tether’s reserve operations—and warned that large-scale liquidation of backing assets could trigger financial instability.
Yet beneath the caution lies an unspoken admission: central banks feel threatened. In nations where fiat currencies lose value rapidly and banking infrastructure is weak or costly, USDT has become the de facto digital dollar. The BIS fears what it cannot control—and stablecoins like Tether now operate at a scale beyond institutional reach.
This reaction highlights that the real challenge isn’t regulation—it’s relevance. Stablecoins have become vital financial rails for the unbanked and underbanked. Even as central banks push central bank digital currencies (CBDCs) and unified ledgers, they’re playing catch-up to a reality already in motion.
Deepening Contradictions
Tether remains unlicensed in many jurisdictions—yet serves as the backbone of global stablecoin commerce. It is the digital dollar of choice for millions. Even in regulated environments like the UAE, it occupies a gray zone: traded freely but not fully accepted; indispensable yet incompletely recognized.
For regulators, this presents a dilemma: you can set policies, issue licenses, and build alternatives. But until a better solution emerges—one that matches USDT’s accessibility, speed, and low cost—Tether will continue doing what others cannot.
And therein lies the uncomfortable truth: amid today’s global financial transformation, regulators may need USDT more than Tether does—proof positive of its unrivaled stablecoin dominance.