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Forex Brokers Accepting USDT Deposits

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The Tether Foundation created USDT (Tether) as the prototype of a class of cryptocurrencies created to mirror the movements of the US Dollar. This new class of cryptocurrencies were known as stablecoins. Stablecoins were created to solve the immense volatility inherent in Bitcoin, Ethereum and some of the other notable top 10 cryptos. Other stablecoins have since been created, but Tether remains the most popular and widely used stablecoin. This time, we will discuss using USDT as a preferred funding method for your FX account and identify the USDT forex brokers.

USDT entered the market as the first stablecoin in 2014. USDT is part of the stablecoins classified as "partially collateralized." This means that even though USDT is supposed to maintain parity with the US Dollar (i.e. have an exchange rate of 1:1), the rate is more like 1.01 USDT (or higher) to 1 USD. This is because the Tether Foundation does not maintain 100% of the US Dollar reserves required to match the number of USDT tokens in circulation. It maintains other assets to make up this reserve base.

Why is USDT Provided As a Funding Method?

Using USDT as a funding method for FX trading solved a significant problem with using other cryptocurrencies to fund and withdraw from a trading account. This is the problem of volatility. Fiat currencies are priced to four or five decimal places, and the least single movement of a currency pair is in the region of 0.0001 points. So you do not have whole-number moves in currencies but percentage point moves. This property gives currencies a measure of inherent stability and shields users against volatile price movements. Indeed, this is one property that any asset used as a currency must have. Bitcoin, Ethereum and other cryptocurrencies within the top 20 most capitalized cryptos do not have such stability. Price changes for these cryptos are whole-number moves. These moves are an expression of heavy volatility that can either cause the value of the fiat equivalent to shoot up in value or erode its value. Imagine making profits in trading, and in between the time of withdrawal and the funds getting into your hands, 10% or 20% of its value has been eroded by price changes.

For instance, what if you withdraw Bitcoin for $24,000/BTC, and when converting to fiat currency for offline use, it falls to $18,000/BTC? This drop constitutes a 25% value erosion. Such radical price moves have occurred in Bitcoin and Ethereum, and they can do so without warning.

Realizing this would be an issue, many FX brokers that offered crypto funding methods quickly saw the need to introduce a stablecoin-based crypto funding method to prevent such price volatility from posing a risk to the broker or the client. This gave rise to the USDT forex brokers that provide USDT as a funding channel.

So with the USDT token as a funding method, we now have the same advantages found with the crypto funding methods and the stability advantage of the fiat currencies.

Another advantage USDT offers traders is the ability to send it using different blockchain networks. Bitcoin has a single blockchain network open for such transactions on most payment channels for FX trading.

  • The USDT stablecoin offers traders the best of two worlds: the stability in exchange rates offered by fiat currencies and the advantages and removal of inhibitions provided by blockchain technology.
  • Provides swift account funding that is devoid of institutional bottlenecks.
  • Readily accessible as anyone with a smartphone or computer can access USDT channels.
  • The process is digitalized, making it fast and easy to conduct transactions.
  • Transactions are stored permanently on the blockchain, and validation of transactions only requires three confirmations.
  • USDT is easily convertible to cash in any location in the world.

How to Use USDT to Fund Your FX Account

The use of Tether as a means of funding your FX trading account is likened to using the USD on a blockchain network. It is easily interchangeable, and you can use it on several blockchains. Funding your account with Tether can be done in two ways.

A) Direct Funding

It is possible to directly fund your trading account using a USDT transfer from your Tether wallet. Offline and online Tether wallets can be used. This method is a crypto-crypto funding method that presupposes prior ownership of an external Tether wallet with USDT. The trader transfers the USDT in the amount to be added to the broker's wallet address (with the network fee included). Once authenticated, the broker will credit the trader's account with the fiat currency equivalent of the USDT. You must already have a Tether wallet with your USDT. Traders who use this route source their Tether from crypto exchanges and then transfer it to their FX broker's Tether wallets.

B) Indirect Funding

This second method is for traders who do not have a Tether wallet and do not have USDT tokens. For such traders, some FX brokers will offer a fiat-crypto gateway using BitPay or Simplex or other gateways that offer the service of selling cryptos for fiat payments. With this method, the trader purchases USDT using a credit/debit card via an API link from the broker's deposit page. This link connects to the third-party gateway. Once the transaction is over, the trader is redirected back to the broker's page with the funds credited. This method provides an instant deposit of the tokens and works in countries where the financial regulators permit fiat-crypto transactions. This method tends to attract a higher service fee as the third-party company adds their service charge to the network fees. The fee is not charged separately; you simply get fewer crypto tokens than you would have obtained elsewhere.

Advantages of USDT As a Funding Method

Some advantages of using USDT as a funding method are already evident from what has been written. But to summarize them, they are as follows:

  • USDT is globally accessible. Traders worldwide no longer have to face discrimination on what methods they can use to fund accounts based solely on their countries of origin.
  • USDT tokens are built on several blockchains, which offer easy adoption and integration. These blockchains are Ethereum, Bitcoin, Tron, Solana, OMG Network, Algorand and EOS. What this means for the FX trader is that it is easy to transact with Tether without fearing failed transactions resulting from a single point of failure.
  • Transacting with Tether is cheap. Typically, USDT transactions on a network like Tron are pegged at a maximum of $1, irrespective of the amount being sent.
  • The multichain integration offered by USDT means that whenever there is network congestion and high fees on a platform like Ethereum, there are other cheaper blockchain channels to transact with.
  • Transacting with USDT is one of the fastest ways to deposit and withdraw funds from trading accounts today.

Disadvantages

  • Like all crypto-based transactions, any deposit or withdrawal transaction done using USDT cannot be reversed. A mistake in sending USDT to a wrong address or errors made when entering the wallet address results in the loss of coins.
  • The main concern with USDT tokens is what assets the Tether Foundation uses as reserves to back up the token to make up the parity peg with the US Dollar. It turns out that less than half of all USDT tokens are actually backed with USD reserves. This poses a risk of peg dissociation, as experienced recently by the UST stablecoin.
  • Access to Tether in some countries is difficult and requires a multi-step process that causes the user to incur unnecessary fees.

Conclusion

The USDT has so far held its own and remains at par with the US Dollar. As an FX funding method, it comes with more benefits than risks and combines the best of both worlds.

The brokers listed here are all USDT forex brokers. They offer direct and indirect funding methods. Whichever you find more appealing, you will find a broker that gives you what you need.