USDT is backed by reserves held by its issuer (Tether Limited) at a ratio close to 1:1 — meaning roughly 1 dollar in reserves (cash, short-term US Treasury bonds, and other liquid assets) backs every USDT issued. This keeps the price very close to 1 dollar in the vast majority of cases. That said, it’s worth being upfront: this isn’t a government guarantee or bank deposit insurance — it’s a market mechanism supported by reserves and trader arbitrage. In practice, USDT is one of the most stable and liquid stablecoins on the market, and deviations from the $1 peg are typically measured in fractions of a percent.
