Tether (USDT), the world’s largest stablecoin, has achieved a significant milestone by surpassing 500 million users, with recent reports indicating the figure has climbed even higher to around 534 million as of early 2026.
This growth was detailed in Tether’s Q4 2025 USD Market Report released in early February 2026. The stablecoin added an estimated 35.2 million new users in Q4 2025 alone. This marks the eighth consecutive quarter of adding over 30 million users, showing consistent acceleration.
On-chain holders reached 139.1 million up 14.7 million in the quarter, while monthly active on-chain users hit a record 24.8 million. Tether estimates over 100 million additional users hold USDT on centralized platforms. Total USDT market cap grew to approximately $187.3 billion up $12.4 billion in Q4, with transfer volume hitting a record $4.4 trillion in the quarter.
This expansion occurred despite broader crypto market challenges, including a sharp contraction starting in October 2025 with overall crypto market cap dropping over 30% in some periods. Tether attributes much of the growth to demand in emerging markets for dollar liquidity, remittances, payments, and as a store of value amid macroeconomic uncertainty.
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CEO Paolo Ardoino has previously emphasized USDT’s role in financial inclusion, noting heavy adoption in developing regions—effectively extending “dollar hegemony” through digital means. However, risks and concerns persist, as highlighted in recent coverage.
USDT briefly dipped to around $0.9980 in early 2026; its weakest level in over five years, sparking brief rumors and scrutiny. While deviations have been minor and short-lived, any sustained de-pegging could ripple through crypto trading where USDT dominates volumes and raise systemic questions.
As USDT’s role grows (holding ~70% of stablecoin wallets and massive U.S. Treasury exposure of over $141 billion), it faces intensified regulatory attention, transparency debates; historical issues with full 1:1 backing, and potential risks from illicit use or reserve management.
Growth has fueled discussions about stablecoins’ systemic importance, including potential impacts on Treasury markets, liquidity pressures, and the need for stronger oversight to mitigate financial stability threats. Tether’s trajectory underscores stablecoins’ evolution from crypto trading tools into global financial infrastructure, but its outsized influence keeps peg and regulatory risks in sharp focus.
USDT is designed to maintain a strict 1:1 peg to the US dollar. While it has historically recovered from minor deviations and benefits from a heavily Treasury-backed reserve structure, peg stability remains a key concern for users, traders, and regulators.
In recent weeks including around early February 2026, USDT briefly dipped to approximately $0.9980 on some exchanges—its weakest level in over five years. This minor depeg was short-lived, with the token quickly returning near parity. Similar brief wobbles have occurred before, often tied to broader market stress, liquidity crunches on exchanges, or large redemptions during risk-off periods.
These events are typically driven by temporary imbalances like heavy selling pressure or exchange-specific liquidity issues rather than fundamental reserve shortfalls. Tether has consistently honored direct redemptions at $1 through its primary portal, helping restore the peg rapidly.
Historical context includes more severe past incidents, such as drops to ~$0.95 during the 2022 Terra/Luna collapse or even lower in earlier years but recoveries have been the norm in recent cycles. Tether’s reserves are heavily weighted toward US Treasuries over $141 billion, a record high, which are low-risk and liquid.
However, allocations to higher-volatility assets like Bitcoin ~5-6% of reserves, gold, and secured loans introduce potential risks. A sharp, simultaneous drop in BTC/gold prices could erode the excess buffer ~$6.3 billion reported, potentially leaving USDT undercollateralized in extreme scenarios.
USDT’s peg stability assessment to its lowest level “weak” or 5 in late 2025, citing these exposures, disclosure gaps, and limitations in primary redeemability. In a mass redemption event (a “run”), large-scale outflows could strain liquidity if reserves must be liquidated quickly.
While Treasuries are highly liquid, extreme stress could amplify deviations. Historical examples like the USDC’s 2023 depeg tied to SVB exposure highlight that even well-backed stablecoins aren’t immune. Tether faces intense scrutiny, including potential freezes on addresses (Tether has frozen billions in illicit funds at law enforcement’s request), broader stablecoin regulations, and concerns over its dominance.
A major regulatory shock could trigger confidence loss. Institutions like the ECB have warned that stablecoin runs could spill over into Treasury markets or wider financial stability, given Tether’s massive Treasury holdings.
USDT’s outsized role in crypto trading means any perceived weakness amplifies contagion. Brief depegs have correlated with BTC corrections or sideways trading periods. Broader macro events could exacerbate pressures. Tether reported multi-billion-dollar profits in 2025, bolstering its buffer for peg defense.
Growth to over 534 million users with high on-chain activity reflects trust in emerging markets for remittances and dollar access. Minor dips have resolved without systemic fallout, unlike algorithmic stablecoins.
While USDT’s peg has proven resilient amid 2025-2026 market turbulence, risks stem primarily from reserve volatility, redemption mechanics under stress, and its systemic importance. A full collapse remains a low-probability tail risk, but temporary depegs during shocks are plausible and could impact crypto liquidity broadly.