Tether has announced the deployment of USD₮ as a native stablecoin on Bitcoin, utilizing the RGB protocol for greater efficiency and privacy.
This marks a significant development in stablecoin infrastructure, aiming to reduce on-chain congestion and improve transaction privacy for users.
How RGB works for bitcoin assets
RGB is a client-side validation protocol that enables the issuance and transfer of digital assets anchored to bitcoin.
Unlike traditional on-chain tokens, RGB keeps most data off-chain, anchoring only compact commitments on the bitcoin base layer.
With the July 2025 release of RGB v0.11.1, asset creation on mainnet became possible, paving the way for native USD₮ issuance.
Features and user experience
USD₮ transactions on RGB are executed off-chain between wallets, with only occasional anchors to the bitcoin blockchain for finality.
This model offers almost instant transfers and significantly lowers the data footprint, though users must manage backups of both bitcoin keys and RGB proofs.
Tether has yet to publish official figures on fees, but the design is expected to reduce costs compared to regular on-chain transactions.
Privacy, costs, and interoperability
RGB-based stablecoin transfers expose less metadata on-chain, enhancing privacy for users.
Fees occur only when anchoring states to bitcoin, and local verification allows users to independently audit their asset history.
Work is ongoing to enable interoperability with Lightning Network, though native compatibility is not yet available.
Risks and adoption challenges
The shift to client-side validation increases wallet complexity for users, who must securely back up proofs to prevent loss of funds.
Compliance with KYC/AML regulations remains a consideration, and there may be temporary incompatibilities between wallet implementations as the ecosystem matures.
Community debate continues over the expansion of tokenized assets on bitcoin, with some viewing it as a pragmatic evolution of the network’s use cases.
Tether’s move could accelerate stablecoin usage for retail payments, remittances, and volatility hedging within the bitcoin ecosystem, provided wallet support and regulatory clarity keep pace.
