# What is USDT (Tether)? How it works, for businesses
USDT is a dollar token that Tether issues and redeems. Each one is a balance in a smart contract, so it moves in minutes and can't be reversed, but it's a claim on Tether rather than a bank deposit, and Tether can freeze it.
By Pavel Skalin, Founder & CEO, Align · Updated 13 November 2026 · 3 min read · https://alignlabs.dev/guides/how-usdt-works
## Key takeaways
1. USDT is a token that Tether issues and redeems for one US dollar. Each one is a balance in a smart contract on a public blockchain, not a coin and not a bank deposit.
2. Only Tether can issue or redeem USDT, or blacklist an address so its balance can't move. Anyone can send it, any day, and a confirmed payment can't be reversed.
3. USDT runs on many blockchains that don't connect, so the payer and your company have to use the same network.
4. Buying or redeeming directly with Tether starts at $100,000 and costs the greater of $1,000 or 0.1% per redemption, so most companies go through an exchange or a payments provider.
5. USDT pays holders no interest. Hold what your company needs for stablecoin payments, and convert the rest.
import { TokenStack } from "@/app/components/token-explainer/TokenStack";
import { PaymentPath } from "@/app/components/token-explainer/PaymentPath";
import { FeeFigures } from "@/app/components/token-explainer/FeeFigures";
## The short answer
USDT is a stablecoin: a token that Tether issues and promises to redeem for one US dollar. On each blockchain it runs on, a smart contract keeps a ledger of which address holds how much, and sending USDT changes two lines in that ledger. Tether says every token is backed by its reserves.
For a business, that means USDT moves like a message, around the clock and in minutes, but it's a claim on one company rather than a bank deposit, and that company can freeze it. The rest of this guide takes those parts one at a time.
## The five layers of a USDT
Every USDT your company holds depends on five things. Scroll through them in order, from the token you see down to the reserves behind it.
## Follow one USDT payment
A customer pays your company 10,000 USDT for an invoice. Here's every hand the payment passes through, and what to check at each one.
## What it costs to deal with Tether directly
Tether's own fees apply only if your company buys or redeems USDT with Tether. As of 9 November 2026, [Tether's fees page](https://tether.to/en/fees/) lists:
Below those amounts, companies buy and sell USDT through an exchange or a payments provider, which set their own prices. Every on-chain transfer also carries a network fee, paid by whoever sends it; see [who pays gas fees on stablecoin payments](https://alignlabs.dev/guides/who-pays-gas-fees-on-stablecoin-payments).
## USDT vs dollars in a bank account
Both are dollars on paper. They behave differently once they're on your balance sheet.
| | USDT | Dollars in a bank account |
|---|---|---|
| Who owes you the money | Tether | The bank |
| When it moves | Any time, usually in minutes | On bank rails such as ACH, SEPA or SWIFT, on their schedules |
| Reversals | None: a refund is a new payment | Recalls and disputes are sometimes possible |
| Interest | None for holders | Depends on the account |
| Deposit insurance | None | Often, up to a limit |
| Who can freeze it | Tether, at the contract level | The bank, or a court through the bank |
## Five risks, and how to manage them
None of these is a reason to avoid USDT. Each one needs a habit.
| Risk | What can happen | What to do |
|---|---|---|
| Wrong network | Tokens arrive on a chain your wallet doesn't watch | Name the network on every invoice and ask for a small test payment. If it's already happened, see [sent USDT to the wrong network](https://alignlabs.dev/guides/sent-usdt-to-wrong-network) |
| Frozen funds | Tether blacklists an address, and its balance can't move | Know who pays you and record each sending address. See [why USDT and USDC get frozen](https://alignlabs.dev/guides/why-usdt-usdc-get-frozen) |
| Price away from $1 | Market prices can move below $1 in periods of stress | Don't hold more USDT than your upcoming payments need |
| Issuer risk | [Whether USDT is safe to hold](https://alignlabs.dev/answers/is-usdt-safe-to-hold) depends on Tether's reserves and its ability to redeem | Read Tether's reserve reports and consider spreading balances. See [USDT vs USDC for business](https://alignlabs.dev/guides/usdt-vs-usdc-for-business) |
| Local rules | Some countries and providers restrict USDT | Check the rules where you and your counterparties operate. See [stablecoin regulation by country](https://alignlabs.dev/guides/stablecoin-regulation-by-country) |
## How Align handles USDT
Align lets your company hold USDT and USDC, plus EURC for euros, next to balances in USD, EUR, GBP and AED, in a [stablecoin business account](https://alignlabs.dev/accounts/stablecoin-business-account).
- **Deposits:** USDT on Ethereum, Tron, Solana, Polygon, Arbitrum or Optimism, from a wallet or exchange account your company owns. Each network has its own deposit address.
- **Payments from customers:** if you want customers to pay you in USDT directly, [ask Align first](https://alignlabs.dev/contact), before you put an Align deposit address on an invoice.
- **Sending:** Align pays the network fee when you send USDC or USDT from your Align balance.
- **Paying out:** pay suppliers and staff in USD, EUR, GBP or AED, or send USDC and USDT to wallets. Pricing is quoted on request.
Align isn't a bank, and your balances aren't bank deposits or covered by deposit insurance.
## Sources
- Tether, [Fees](https://tether.to/en/fees/) (accessed 9 November 2026)
- Tether, [Transparency](https://tether.to/en/transparency/) (accessed 9 November 2026)
- Etherscan, [TetherToken contract on Ethereum](https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7#code): six decimals; issue, redeem, addBlackList and destroyBlackFunds functions (accessed 9 November 2026)
## Common questions
### Is USDT the same as having dollars in the bank?
No. USDT is a claim on Tether, not on a bank, and it has no deposit insurance. It's designed to be worth one dollar, and Tether redeems it for customers it has verified.
### Can my company redeem USDT with Tether directly?
Yes, once Tether verifies your company. As of 9 November 2026, the minimum is $100,000, verification costs $150 paid in USDT, and each redemption costs the greater of $1,000 or 0.1%.
### Can a USDT payment be reversed?
No. Once the network confirms a transfer, it's final, and there are no chargebacks. A refund is a new payment back to the customer.
### Can Tether freeze USDT that my company receives?
Tether can freeze any address at the contract level. A freeze applies to an address, not to tokens that have already left it, but if your own address is linked to hacks, scams or sanctions, it can be frozen too. Knowing who pays you is the main protection.
### Does holding USDT earn interest?
No. Tether keeps the return on its reserves, and holders receive nothing. To earn on idle dollars, a company has to convert them or use a separate product.
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This guide is general information, not legal, tax or financial advice. Rules and providers' terms change; check the sources linked above and take advice on your own situation.
## Related guides
- [USDT vs USDC for business payments: which to hold and which to send](https://alignlabs.dev/guides/usdt-vs-usdc-for-business)
- [Tron, Ethereum, Solana or Base: which network to use for USDT and USDC payments](https://alignlabs.dev/guides/which-network-for-usdt-usdc-payments)
- [Why USDT and USDC get frozen, and how a business avoids frozen funds](https://alignlabs.dev/guides/why-usdt-usdc-get-frozen)
- [How to accept USDT and USDC payments from business customers](https://alignlabs.dev/guides/accept-usdt-usdc-from-business-customers)