USDT mint and burn 101: What you need to know at Gamdom
USDT isn’t just stable, it’s dynamic. Find out how minting and burning shape crypto liquidity.
Author : Team Gamdom
Published : 07/30/2025
What you need to know about the USDT mint and burn process
Tether (USDT) is a stablecoin built to maintain a 1:1 peg with the US dollar. To maintain stability, Tether uses key mechanisms like reserve backing, collateral management, and most importantly, the USDT minting and burning process. This system plays a major role in adjusting supply and supporting liquidity in the crypto market.
Key Takeaways:
USDT minting and burning reflect institutional demand, helping Tether keep its stablecoin backed 1:1 with USD while adapting to market changes and crypto liquidity.
Large mint or burn events can signal market trends, like rising demand or investor pullback.
Tether’s actions are visible on-chain, but transparency and regulation remain hot topics, especially as institutional interest and regulatory scrutiny increase.
What is the USDT mint burn, and how does Tether Limited handle it? Learn everything about it right here with Gamdom:
‘Mint’ refers to the process of creating new USDT tokens and adding them to the circulating supply. In Tether’s case, minting occurs only when institutional clients request issuance, typically after depositing fiat currency. This ensures each new USDT is fully backed and ready for use within the stablecoin ecosystem.
To initiate USDT minting, institutional clients must first complete a know-your-customer (KYC) process with Tether Limited. Once approved, the funds are used to collateralise the USDT issued. This process ensures that Tether Limited’s bank has 1:1 collateral backing the current USDT in circulation.
What does ‘burn’ mean in USDT?
USDT burn refers to the process of permanently removing stablecoins from circulation. Tether Limited burns USDT when users redeem their stablecoins for cash. The equivalent fiat amount, usually USD, is then issued through Tether’s banking partners.
Other times, Tether burns USDT to manage supply across networks. For instance, in 2025, the company burned $1.8 billion worth of USDT across Ethereum, signalling efforts to balance issuance amid changing market activity.
Market observers often interpret large-scale burns as a response to slowed demand or major redemptions. They don’t usually precede market downturns, but they often follow price changes, indicating that supply is being reduced to match liquidity needs.
How does Tether decide when to mint or burn USDT?
Tether minting and burning are not random events. They reflect broader market dynamics around liquidity demand and redemption activity. Tether has stated that it only mints USDT in response to verified conversions and only burns tokens when users redeem them for fiat. These processes often align closely with crypto market trends, especially when BTC moves.
Here are the major factors when Tether Limited mints or burns USDT:
Minting: Responding to demand and signalling liquidity inflow
The USDT mint process is driven by demand when traders need stable collateral to enter the crypto market. For instance, data from Whale Alert reveals that large-scale USDT minting events often precede or coincide with crypto bull runs.
A striking example occurred in late 2024, when billions of USDT were minted just before the BTC price climbed from $66,700 to over $106,000. While this may imply a direct link, most analysts interpret it as a sign of growing capital flow.
In this sense, USDT acts as a proxy for market liquidity. The minting of new tokens signals heightened trader activity and increased demand for crypto assets. For casino and sports betting users, it may be relevant as platforms accepting USDT experience faster transaction processing when minting volumes are high.
Burning: Redemptions and market cooling
On the flip side, USDT is burned when users redeem tokens for fiat currencies. This happens when demand for stablecoin declines or capital exits the crypto ecosystem. Burning trends often trail behind or coincide with BTC price corrections.
In early 2025, following Bitcoin’s (BTC’s) all-time high, significant USDT burns were observed during periods of market correction, often following increased redemption activity. These burns do not directly influence market prices, but reflect changes in user redemption activity and liquidity withdrawal from the crypto ecosystem.
For bettors and casino users, burning reduces the circulating supply of USDT, which may affect market liquidity. It’s relevant if you rely on quick deposits or withdrawals during volatile periods.
The USDT minting and burning pattern is historically tracked with Bitcoin’s price cycles. However, it’s not a one-to-one correlation, and experts warn that this connection is weakening.
Mads Eberhardt, a crypto analyst at Firi, noted that the USDT and BTC relationship is changing as stablecoins begin expanding into non-crypto industries. Besides Gamdom betting, you can also find use for it in remittance and e-commerce.
Ki Young Ju from CryptoQuant also shares thoughts that institutional players increasingly shape BTC liquidity alongside stablecoins. Entities like Bitcoin exchange-traded funds (ETFs) and over-the-counter (OTC) markets are becoming bigger players in BTC’s economy.
Additionally, regulatory changes, like the European Union’s Markets in Crypto-Assets (MiCA) framework and upcoming US stablecoin legislation, may further reshape how USDT minting and burning occur. These policies could introduce standardised audit requirements, better transparency, and less volatility tied to USDT issuance.
Exploring the reason behind this design
Tether’s decision to allow USDT minting and burning is deliberate. This system helps keep the stablecoin pegged to the USD while responding quickly to market demand. Instead of setting a fixed supply like Bitcoin, the USDT supply changes based on user activity and liquidity needs.
Here are some of the most frequently asked questions on why USDT is minted and burned:
What is the purpose of minting and burning?
The mint and burning process keeps the USDT circulating supply balanced with Tether Limited’s reserves. If you wish to redeem your USDT at any point, you can do so with great confidence that it will be converted promptly.
The other reason for minting and burning is to keep the USDT value 1:1 with the USD. It’s still affected by supply and demand, so having too many or too few compared to reserves will fluctuate the USDT market value.
How does the USDT supply affect the market?
Changes in the USDT supply can affect crypto market liquidity. When more USDT is minted, it often signals that users are moving money into crypto markets, increasing available capital for trading.
On the other hand, USDT supply contraction through burning often follows market corrections and redemptions, reflecting lowered demand, but its effect on overall market liquidity varies by exchange and trading activity. These shifts help Tether adjust the supply to current market conditions.
Why doesn’t USDT just stay fixed like Bitcoin?
Unlike Bitcoin, which has a fixed supply of 21 million coins, USDT is a stablecoin designed for price stability. A fixed supply would limit Tether’s ability to respond to user deposits and redemptions. With no flexibility, USDT issuance wouldn’t be possible when institutional demand increases. A dynamic supply helps USDT remain useful for trading, transfers, and liquidity.
Transparency and risk concerns
While the mint and burn model keeps USDT stable, it also raises questions about trust, visibility, and accountability. Users and regulators often ask how transparent the system is, whether it’s been abused, and what checks are in place.
Here are some of the most raised concerns:
Can anyone track when USDT is minted or burned?
Yes. All USDT mint and burn events are recorded on public blockchains like Ethereum (ETH), Tron (TRX), and Solana (SOL). These on-chain transactions are visible and timestamped, allowing anyone to verify changes in the USDT circulating supply. Tether also publishes a transparency page showing real-time issuance data to keep users informed of supply changes.
Has USDT minting ever caused problems for its users?
In the past, large-scale USDT issuance has raised concerns among traders and regulators. Some critics speculate that sudden supply increases may influence market sentiment or price trends. Others worry that burning may reduce liquidity during downturns. While these events don’t always cause problems directly, they have fueled debates about how much control Tether Limited has over the market.
Is USDT minting/burning regulated or audited?
Tether is not formally regulated in the same way as banks, but it has taken steps toward transparency. The company provides monthly assurance reports by third-party accounting firms to show reserve backing. However, these are not full audits. While some regulators are pushing for stricter rules, the current system relies on internal practices and public disclosures.
USDT mint and burn: How it affects you, the user
Understanding how USDT is minted and burned offers valuable insight into the Tether ecosystem. Every action by Tether Limited directly impacts the token’s supply, and knowing how the process works can help you decide if USDT is a smart investment.
This knowledge also helps you manage your USDT more confidently, whether you're entering the crypto market, playing casino games on Gamdom, or wagering on major sports events.
