Tether Backs Bitcoin-Based USDT Settlements
Crypto startup Utexo has raised a $7.5 million seed round led by Tether. The funding is for building a platform that enables native USDT stablecoin settlements directly on the Bitcoin network, promising faster finality and lower fees than other solutions.
Tether's investment in Utexo is a strategic move to solidify Bitcoin's role as a primary settlement layer for USDT, the world's largest stablecoin with a supply exceeding $184 billion. Historically, the bulk of USDT transactions have occurred on other blockchains like Ethereum and Tron, which have faced challenges with network congestion and high transaction fees. This initiative aims to bring a significant portion of that volume "back home" to Bitcoin. Utexo's core technology combines the Lightning Network for speed with the RGB protocol for asset issuance. The Lightning Network enables near-instantaneous transactions with fees that are fractions of a cent, a stark contrast to the potentially high and volatile gas fees on Ethereum. This makes micropayments and high-frequency trading economically viable with USDT on Bitcoin. The RGB protocol is key to enabling smart contracts and tokenization on Bitcoin without altering its core code. It uses a concept called client-side validation, where transaction data is kept off-chain and only verified by the parties involved. This ensures privacy, as sensitive transaction details are not broadcast publicly on the blockchain, addressing a major drawback for businesses using stablecoins on other public ledgers. This new infrastructure promises predictable, fixed fees for USDT transactions, a critical feature for businesses that need to model costs accurately. Co-founder Chris Hutchinson explains that Utexo's API will allow partners to route USDT on Bitcoin with full control over their cost structure, a feature not offered by existing payment rails. The funding round saw participation from notable institutional players, including Franklin Templeton, Maven11 Capital, and FlowTraders, signaling strong institutional interest in Bitcoin-based financial infrastructure. Utexo's co-founder, Viktor Ihnatiuk, noted that this technology could enable wallets to offer free USDT transactions to their users for the first time, potentially driving wider adoption. For Tether, this investment is part of a broader strategy to expand USDT's use cases and reinforce its position in the global financial system. CEO Paolo Ardoino has consistently emphasized Bitcoin's importance to Tether's long-term vision, and this move provides the "production-ready infrastructure" that was previously missing to make large-scale, Bitcoin-native stablecoin settlement a reality.
