The main difference between USDT and USD lies in the regulations and policies that govern them. While USD is directly regulated by the Federal Reserve in the United States, USDT is a crypto asset issued by a private company, Tether Limited. In September 2017, Tether published a memorandum from a public accounting firm stating that the USDT token is secured by fiat US dollars. However, Tether is not “officially” issued by a government authority.

Independent lawyer Lewis Cohen emphasized that the memorandum is not enough to prove that USDT is fully backed by US dollar reserves. As for USDT token holders, they do not have the contractual rights, legal claims, or protection against loss that holders of US dollars have. Like Bitcoin and Ethereum, USDT is a crypto asset that can be used as a transaction tool to purchase other coins or tokens. Currently, USDT is one of the most commonly used trading pairs on crypto exchanges around the world, primarily to buy other coins or tokens. For example, Bitcoin paired with USDT will be shown as BTC/USDT, while Ethereum as ETH/USDT and others.