Tether Plans On-Chain Reserves for Stablecoin 2.0
A Tether co-founder said the company plans to record reserve holdings on public blockchains so users, exchanges and regulators can verify backing on-chain.
A Tether co-founder outlined plans for a next-generation stablecoin, which he described as “stablecoin 2.0,” that would shift reserve records onto public blockchains so backing can be verified on-chain rather than relying only on bank statements and attestations. Development work and partner discussions are under way, but no rollout date was given.
The executive described a technical approach that records proof of reserves and related transactions on distributed ledgers. The proposal includes using smart contracts and tokenized representations of reserve instruments so that each issued token can be matched to assets or claims held by Tether. Cryptographic proofs and blockchain history would be used to make reserve information auditable and accessible.
He noted the effort requires both technical and legal work. Some reserve components may remain off-chain for legal or operational reasons, and the company is consulting custodians, auditors and legal advisers to align on-chain records with securities, banking and custody rules. The design will also incorporate measures for privacy and fraud prevention alongside public verification.
Supporters of on-chain reserves contend the approach could provide near real-time visibility into a stablecoin’s backing and reduce reliance on periodic audits and attestations. Tokenizing short-term government debt or bank deposits raises questions about custody, settlement and the legal standing of on-chain claims, issues the co-founder acknowledged.
Tether has faced scrutiny over its reserve disclosures in the past and agreed to provide more detailed public information and periodic attestations after a legal settlement. The executive said next steps include pilot tests with tokenized reserve instruments and further engagement with regulators to ensure any on-chain mechanisms comply with legal obligations.
Regulatory outcomes and technical hurdles will determine how much of Tether’s reserves can be placed on-chain and how quickly pilots move to broader implementation.
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