Tether or USDT is a digital token that is supposedly backed by a U.S. Dollar reserve fund. Its unit value is pegged directly to that of the U.S. Dollar and its purpose is to provide a decentralized method of exchanging value while also using a familiar accounting unit. Although initially offered through a mobile P2P payments app as an exchange-traded token, its use case has expanded as more exchanges have listed it. Because these exchanges must enact KYC and AML procedures to determine withdrawal limits, they establish a cap on the amount of funds their clients are allowed to withdraw. If a user’s portfolio exceeds the cap, there is no way to hedge against a market downturn. Accordingly, USDT is often used as a hedging tool that allows users to liquidate cryptocurrency holdings for a token pegged to the U.S. Dollar. Unusual demand and supply for USDT has resulted in several instances where the U.S. Dollar peg was broken, and the token traded at a premium or a discount. Tether’s blockchain is based on the Omni Protocol and uses Proof of Reserves to provide records of its reserves, which serves as an auditing mechanism. USDT and its token pairs are supported by many exchanges, including Poloniex, Bitfinex, ShapeShift, and Kraken.