Stablecoin issuer Tether has announced the integration of USDT into Bitcoins ecosystem, including its base layer and the Lightning Network. This integration utilizes Taproot Assets, a protocol powered by Bitcoins Taproot upgrade and developed by Lightning Labs.

The announcement was made during a fireside chat at the first Plan ₿ Forum in El Salvador by Tether CEO Paolo Ardoino and Lightning Labs CEO Elizabeth Stark.

In a statement, Ardoino said,

Tether is committed to driving innovation in the Bitcoin ecosystem. By enabling USDt on the Lightning Network, we are not only reinforcing Bitcoins foundational principles of decentralization and security but also creating practical solutions for remittances, payments, and other financial applications that demand both speed and reliability.

USDT Integration with Bitcoin Lightning Network

In its official blog post, Tether and Lightning Labs plan to continue working together to develop the ecosystem in a bid to support adoption and provide resources for developers and users. With USDT becoming operational on the Lightning Network, the integration may contribute to expanding Bitcoins use in financial applications.

Lightning Labs Stark and business development director Ryan Gentry explained that once the integration is complete, users will be able to make cross-border transactions with USDT on the Lightning Network, with fast settlement and reduced transaction costs compared to other networks.

Businesses and payment providers already using Lightning for Bitcoin transactions will have the option to incorporate USDT without modifying their existing infrastructure. The integration is also expected to support machine-to-machine transactions, potentially enabling applications such as AI-driven payments and interactions between autonomous systems.

Additionally, USDT on Bitcoin could contribute to the expansion of financial applications within the latters decentralized finance (DeFi) and tokenization ecosystem, including lending, trading, and on-chain financial instruments.

Tethers El Salvador Expansion

The latest development comes two weeks after Tether announced its plans to move to El Salvador after securing a Digital Asset Service Provider (DASP) license.

As the only country where Bitcoin is legal tender, El Salvador introduced the Chivo Wallet with Lightning Network support in September 2021. While merchants were initially obligated to accept Bitcoin, this requirement was later lifted as part of a $1.4 billion loan agreement with the International Monetary Fund (IMF).