The rise of stablecoins has reshaped global digital finance, and at the center of this transformation stands one dominant player: 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 — the Tether stablecoin dominance in the cryptocurrency ecosystem.
A landmark report 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 weren’t speculative trades or DeFi liquidity maneuvers — they were actual business activities: B2B settlements, peer-to-peer remittances, card-linked spending, and salary disbursements.
This shift signals 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 another crypto asset — it functions as a de facto 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 gap traditional finance has long failed to address.
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 transaction fees and instant transfers.
According to the same Artemis-led report, Tron dominates stablecoin transfers, especially for USDT. A significant majority of real-world transaction volume settles on this network. This underscores how Tether stablecoin dominance manifests most strongly in markets where frictionless value transfer is most urgently needed.
While stablecoins like USDC have pursued a cautious path of regulatory compliance, Tether moved swiftly into regions with the highest demand, expanding rapidly without waiting for approvals. Despite drawing intense regulatory scrutiny, USDT is now deeply embedded in the global financial infrastructure.
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The UAE Case: Recognition Without Full Endorsement
By late 2024, the Abu Dhabi Global Market (ADGM) recognized USDT as a “recognized virtual asset” — but only when issued on Ethereum, Solana, and Avalanche. Notably, it excluded USDT on the Tron network, despite Tron being Tether’s primary issuance chain 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, Tron is precisely the network enabling USDT’s mass real-world utility and reinforcing its global stablecoin leadership — particularly in cross-border commerce.
There’s a crucial distinction here: ADGM’s recognition allows Virtual Asset Service Providers (VASPs) to offer USDT for trading and investment purposes, 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, share off-chain data, and obtain approval for payment use.
As of June 2025, Tether has not publicly registered under this framework.
This means USDT can currently only be used for investment in the UAE — not for merchant payments, salary transfers, or other domestic payment functions.
In August 2024, Tether announced a partnership with Phoenix Group to launch a UAE dirham-pegged stablecoin. However, sources close to the matter indicate the collaboration never materialized. Tether continues searching for local partners, while UAE banks remain hesitant — likely due to compliance risks and reputational scrutiny associated with aligning with a globally watched entity.
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 crypto asset. Given that USDT isn’t registered with the central bank for payments, 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 for investment purposes remain compliant. However, any platform enabling USDT for payment use — such as merchant plugins, remittance channels, or payroll integrations — would violate UAE law.
At present, UAE regulators appear to tolerate USDT’s presence on trading platforms as long as payment functionality isn’t activated. But this status quo remains fragile.
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Frequently Asked Questions
Q: Is USDT legal in the UAE?
A: Yes, but with limitations. USDT is recognized as a virtual asset for investment and trading purposes in regulated markets like ADGM and VARA. However, it is not approved for use in payments unless issued by a registered provider under the Central Bank’s Payment Token Services Regulation.
Q: Can I use USDT to pay for goods and services in the UAE?
A: Not legally. While individuals may privately transact using USDT, businesses accepting it for payments operate in a regulatory gray area and risk non-compliance with financial laws.
Q: Why hasn’t Tether registered with the UAE Central Bank?
A: The reasons are unclear, but likely involve strategic decisions around compliance requirements, transparency demands, and challenges in securing local banking partnerships due to reputational concerns.
Q: Is Tron-based USDT banned in the UAE?
A: It’s not outright banned, but ADGM does not recognize USDT issued on Tron as a “recognized virtual asset,” limiting its institutional use within that jurisdiction.
Q: Could the UAE introduce its own stablecoin?
A: While no official plans have been announced, the UAE has shown strong interest in digital finance innovation. A central bank digital currency (CBDC) or regulated private stablecoin remains a possibility in the medium term.
Q: What risks do investors face using USDT in the UAE?
A: The primary risks are regulatory uncertainty and potential future restrictions on liquidity or convertibility if policies shift. Investors should monitor official guidance from UAE financial authorities.
The BIS Warning: Stability or Suppression?
On June 24, 2025, the Bank for International Settlements (BIS) issued its clearest warning yet on stablecoins. In its report, BIS labeled them “an unsound form of money,” arguing they fail key monetary functions like singleness, resilience, and integrity. It specifically raised concerns about Tether’s reserve operations and warned that large-scale redemptions could trigger financial instability.
Beneath this caution lies a deeper truth: central banks feel threatened. In nations where fiat currencies lose value rapidly and remittance costs are exorbitant, USDT has become the de facto digital dollar. BIS fears what it cannot control — and stablecoins like Tether have already grown beyond institutional oversight.
This reaction reveals that the real challenge isn’t regulation — it’s relevance. Stablecoins have become financial lifelines for the unbanked and underbanked. Even as central banks push CBDCs and unified ledgers, they’re playing catch-up to a reality already in motion.
The Deepening Contradiction
Tether remains unlicensed in many jurisdictions — yet it powers the backbone of global stablecoin commerce. It’s the digital dollar of choice for millions. Even in regulated environments like the UAE, it occupies a legal gray zone: traded but not fully accepted, essential yet incompletely endorsed.
For regulators, this presents a dilemma: you can draft policies, issue licenses, and build alternatives. But until a better solution emerges, USDT will continue doing what others cannot.
And therein lies an uncomfortable truth: amid today’s global financial restructuring, it may be regulators who need USDT more than Tether does — a testament to its unmatched dominance in the digital currency landscape.
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