Lightning Labs, creators of Bitcoin’s secondary layer Lightning Network, have announced a partnership with Tether to bring its USDT stablecoin onto the Bitcoin network using the Lightning Network’s layer 2 scaling service. The collaboration was made public by Lightning Labs CEO Elizabeth Stark and Tether CEO Paolo Ardoino at the recent Plan B conference held in El Salvador. The partnership utilizes the Taproot Assets protocol, an upgrade that expanded the Bitcoin network’s functionality to support tokenized assets this year.
Proudly boasting a market cap of $139.4 billion, Tether is currently the largest stablecoin globally. According to CoinGecko, it is nearly three times larger than its closest competitor, Circle’s USD Coin valued at $53.1 billion. In 2024, Tether processed transactions worth an impressive $10 trillion, in addition to its presence on over ten blockchains including Ethereum, Tron, Solana, and Avalanche.
Stark, alongside Ryan Gentry, Lightning Labs’ business development director, stated that the integration will empower retailers accepting Bitcoin over Lightning to also accept USDT using the same platform. Stark noted that the integration offers the stablecoin a global reach and opens the Bitcoin network to users from emerging markets who frequently utilize stablecoins to protect themselves against the depreciation of their local currencies. Additionally, the integration is speculated to support the anticipated “wave” of transactions between AI agents and autonomous vehicles while also facilitating small-scale USDT transfers on Lightning.
Tether recently moved operations to El Salvador where, presently, Bitcoin is accepted as official currency. Despite its endorsement of Bitcoin and the release of its Lightning Network-backed Chivo Wallet in September 2021, El Salvador has not experienced the expected level of success. However, as part of a $1.4 billion loan agreement with the International Monetary Fund, a recent shift in policy now makes Bitcoin payments optional rather than compulsory for the country’s traders.