Is USDT Stable? What Cashback Recipients Should Know

CB-Dogs pays cashback in USDT, so it is fair to ask how stable USDT really is. The honest answer has two halves. USDT has held very close to one US dollar for most of its history. It is also not a bank deposit, it has moved away from one dollar during market stress, and its reserves are managed by a private issuer. This article explains both halves in neutral terms, so you can decide how to handle USDT you receive. It is general information, not investment advice, and it makes no prediction about any price.

Key takeaways

• A stablecoin is designed to track a reference asset, such as one US dollar, but the peg is a goal backed by reserves and market trading, not a guarantee
• USDT has traded below 1 dollar during stress, including a brief fall to about 0.85 on one exchange in October 2018 and about 0.95 in May 2022, and recovered each time
• Tether publishes reserve reports on its transparency page; these are disclosures to read, not guarantees
• Other risks include the issuer, regulation, exchange liquidity, and the issuer's ability to freeze addresses
• A sensible habit for cashback recipients is to receive USDT, convert or use what you need, and not treat it as savings

What a stablecoin peg is

A stablecoin is a crypto token that aims to keep a steady value against another asset, most often the US dollar. For fiat-backed coins such as USDT, the issuer says it holds reserves (cash, short-term government securities and other assets) against the tokens in circulation, and it lets approved customers redeem tokens for dollars.

The peg is maintained mostly by two forces. First, redemption: if the token trades below one dollar, an eligible holder can in principle redeem it with the issuer at one dollar and sell the dollars, which pushes the price back up. Second, market arbitrage: traders buy below the peg and sell at it. Both depend on confidence that the reserves exist and that redemptions will be honoured. When confidence drops, the price can move away from one dollar even if the reserves turn out to be fine.

Note that most people cannot redeem directly with the issuer. Ordinary holders sell on exchanges, so the price they see depends on exchange liquidity and on whoever is buying at that moment.

USDT's record: small deviations and a few real episodes

On a typical day USDT trades within a fraction of a cent of one dollar. Larger moves are rare but have happened, and the largest ones matter more than the quiet days.

Both figures are exchange-specific lows reported at the time, and different venues showed different prices. There have been other smaller deviations, and a longer list is kept by crypto news outlets such as Protos. Two points are worth taking from the history:

• Deviations have so far been temporary, but "so far" is not a promise.
• Stress in the wider crypto market, or in another stablecoin, can spill over even when your own coin's reserves are unaffected.

Sources: CoinDesk, 15 October 2018; CNBC, 13 May 2022.

What the reserve reports say

Tether, the issuer of USDT, publishes information about its reserves on its transparency page. For several years its main disclosure was a quarterly attestation: an accounting firm checks specific figures, such as reserves against liabilities at a given date, and gives an opinion on them. Tether said in August 2022 that BDO Italia would complete these attestations, and described attestations as a step on the path toward a full audit (Tether announcement).

How to use this information: read it as disclosure, not as a guarantee. An attestation or audit covers a date in the past, the composition of the reserves can change, and an opinion on financial statements is not insurance. Check Tether's own transparency page for the current reports rather than relying on a summary, including this one.

The main risks, in plain terms

• Issuer risk. USDT is a liability of a private company. Your claim depends on the issuer's reserves, management and operations, and there is no deposit insurance scheme for a stablecoin like there is for many bank accounts.
• Regulatory risk. Stablecoin rules differ by country and are still changing. A rule change can affect where USDT can be listed, redeemed or used, and it can differ from your country to another.
• Exchange liquidity risk. In a stress event, the price you can get depends on the exchange and its order book. A coin that trades near one dollar on one venue may trade lower on another, and withdrawals can be slow or paused.
• Address freezes. The issuer can freeze USDT held at specific blockchain addresses, which it has done in coordination with law enforcement and sanctions lists. Freezes are usually aimed at addresses linked to crime, but a wallet that receives funds from a flagged source can be caught up too. Tether has the same freeze ability on both the Tron and Ethereum versions of USDT, and the two block lists are separate.
• Chain-specific risks. USDT exists on several networks. Sending to the wrong network or to a wrong address can lose the funds permanently. See USDT TRC20 wallet addresses explained and USDT safety: scams and address poisoning.
• Wallet and scam risk. Most losses people actually experience come from mistakes and scams, not from a depeg. Keep your recovery phrase offline and double-check addresses.

A practical approach for cashback recipients

You do not need a view on stablecoins to handle a payout sensibly. A few habits reduce exposure to the risks above.

1. Treat USDT as a payment rail, not savings. It is a convenient way to move value across borders. It is not a bank account.
2. Convert or spend regularly. If you receive cashback monthly, converting what you need after each payout keeps the amount exposed to any peg risk small. Our guide to converting USDT to local currency safely covers the practical steps.
3. Keep only what you need in the wallet. Leaving a large balance sitting in a wallet or exchange for months increases both peg and security exposure.
4. Use a wallet you control and verify addresses. The wallet guide walks through finding your TRC20 address and testing it before a payout.
5. Check your local rules and keep records. Taxes and crypto rules vary by country, so record dates and amounts of what you receive.
6. Do not chase a small price gap. If USDT trades slightly off one dollar on one exchange, that is not a signal you need to act on, and if you are unsure, wait and compare venues.

CB-Dogs payout rules

For reference, here is how payouts work with CB-Dogs.

• Cashback is paid in USDT on the TRC20 (TRON) network only. Other networks and other coins are not supported.
• The minimum withdrawal is 10 USDT (this is a setting and may change in future).
• Withdrawals of 50 USDT or more have no CB-Dogs transfer fee. Withdrawals below 50 USDT carry a 3 USDT fee.
• Cashback is 60% of the IB commission earned on your account.

You choose when to withdraw. Because the fee is lower in proportion on larger amounts, some recipients wait until a payout reaches 50 USDT and then convert soon after. Whether that fits you depends on how much you trade and how comfortable you are holding USDT in the meantime. See how it works for the full flow.

Frequently asked questions

FAQ

Is USDT always worth exactly 1 US dollar?

No. It is designed to trade close to 1 dollar and usually does, but the price moves slightly and has fallen further during stress, for example to about 0.85 on one exchange in October 2018 and about 0.95 in May 2022. Neither is a prediction for the future.

What is a depeg?

Is it safe to hold USDT?

Can Tether freeze my USDT?

Where can I check the current price or reserve reports?

Next steps

If you receive USDT cashback, set up your wallet with the wallet guide, learn how to convert USDT to local currency safely, and read USDT safety and address poisoning before your first withdrawal.