Why Is stablecoin-growth-and-challenges-in-2025">Tether Investing in Speed to Expand Stablecoin Use on Bitcoin Lightning?

Tether has invested in Speed, a startup building infrastructure to enable stablecoin transactions over the Bitcoin Lightning Network. This move signals Tether’s intent to enhance the efficiency and interoperability of its USDT stablecoin beyond Ethereum and other blockchains, leveraging Bitcoin’s scalability layer to potentially reduce transaction costs and times.

What happened

Tether, the issuer of the USDT stablecoin, has made a strategic investment in Speed, a crypto startup focused on developing technology that facilitates stablecoin payments via the Bitcoin Lightning Network. The Lightning Network is a layer-2 solution designed to enable faster and cheaper Bitcoin transactions by processing payments off-chain and settling them on-chain later. Speed’s infrastructure aims to extend these scalability benefits to stablecoins, which are traditionally issued on Ethereum and other blockchains.

According to Tether’s Chief Technology Officer Paolo Ardoino, the investment is part of a broader strategy to improve stablecoin transaction efficiency and interoperability across multiple blockchain networks. While USDT is predominantly issued on Ethereum and other chains, this move suggests a growing interest in expanding stablecoin usability on Bitcoin’s Lightning Network.

Industry sources interpret Tether’s investment as an effort to leverage Bitcoin’s network effects and security while addressing the high fees and slower confirmation times often associated with Ethereum-based stablecoin transactions. Some analysts view this development as a potential catalyst for broader stablecoin adoption on Lightning, a network that has so far been underutilized for stablecoins compared to Ethereum’s decentralized finance ecosystem.

However, the integration of stablecoins on Bitcoin’s Lightning Network remains at an early stage and faces technical and liquidity hurdles. Speed and Tether’s collaboration aims to address these challenges, although detailed technical specifications and timelines have not been publicly disclosed.

Why this matters

Tether’s investment in Speed highlights a significant development in the evolving relationship between Ethereum-based stablecoins and Bitcoin’s scalability solutions. Stablecoins like USDT have primarily thrived on Ethereum due to its smart contract capabilities and established DeFi infrastructure, but Ethereum’s network congestion and rising fees have prompted exploration of alternative platforms.

By targeting the Lightning Network, Tether is positioning USDT to benefit from Bitcoin’s robust security and growing layer-2 scalability, potentially enabling faster and cheaper stablecoin payments. This could expand the practical use cases for USDT, including micropayments, remittances, and merchant adoption, where low transaction costs and speed are critical.

Furthermore, this move reflects a broader trend where stablecoins, traditionally anchored on Ethereum, seek interoperability across multiple blockchains to enhance liquidity and user experience. If successful, the integration of stablecoins with Bitcoin’s Lightning Network might diversify stablecoin infrastructure and reduce reliance on any single blockchain ecosystem.

In market structure terms, leveraging Lightning for stablecoins could help unlock Bitcoin’s network effects beyond its native asset, potentially reshaping how stablecoins circulate within the crypto economy. However, this shift also underscores the challenges of bridging distinct blockchain protocols and managing liquidity across these environments.

What remains unclear

Despite the confirmed investment and strategic intent, several important details remain undisclosed or unresolved. The exact technical mechanisms by which Speed will enable stablecoin issuance and transactions on the Lightning Network have not been made public. Without this information, it is difficult to assess how Speed’s infrastructure will overcome known challenges such as liquidity management, channel capacity, and interoperability between Ethereum-based stablecoins and Bitcoin’s layer-2.

Additionally, the scale and financial terms of Tether’s investment in Speed have not been revealed, nor is it clear how much USDT issuance will shift to Lightning relative to existing deployments on Ethereum and other blockchains. The timeline for Speed’s technology rollout and Tether’s broader integration plans also remain unspecified.

Regulatory considerations pose another open question. The implications of expanding stablecoin use on Bitcoin’s Lightning Network, including compliance with evolving stablecoin regulation, have not been addressed in public disclosures. Given the regulatory scrutiny stablecoins face globally, this factor could influence adoption and deployment.

Finally, there is no independent third-party audit or performance data available on Speed’s technology, making it challenging to evaluate the robustness or readiness of the solution at this stage.

What to watch next

Public release of detailed technical documentation from Speed explaining how their infrastructure enables stablecoin transactions on the Lightning Network.
Announcements from Tether regarding the scale of USDT issuance planned for the Lightning Network and integration timelines.
Data or reports on liquidity solutions and interoperability mechanisms between Ethereum-based stablecoins and Bitcoin’s Lightning channels.
Regulatory guidance or statements addressing stablecoin use and compliance on Bitcoin’s Lightning Network.
Independent audits or performance assessments of Speed’s technology once available.

Tether’s investment in Speed marks a notable step toward bridging stablecoins with Bitcoin’s Lightning Network, aiming to enhance transaction efficiency and interoperability. However, critical technical, regulatory, and adoption questions remain open. The coming months will be pivotal in determining whether this initiative can overcome existing challenges and reshape the stablecoin landscape across blockchain ecosystems.

Source: https://decrypt.co/352588/tether-invests-crypto-startup-stablecoin-bitcoin-lightning-network. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.