In a surprising turn of events, Tether, the issuer of USDT, has reversed its earlier decision to freeze USDT smart contracts on five blockchains. This reversal comes after feedback from the communities of the affected blockchains: Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand.

Initially, Tether announced plans to discontinue support for USDT on these blockchains by September 1, 2025, citing decreased transaction volumes and community interest. This meant halting the minting, redemption, and transfers of USDT on these networks, effectively freezing any remaining tokens. The company intended to focus on more scalable and actively used blockchains like Ethereum, Tron, and emerging Layer-2 solutions.

However, following community feedback, Tether has revised its approach. While the company will still discontinue direct issuance and redemption of USDT on these five blockchains, users will retain the ability to transfer tokens. This means the tokens will remain transferable but will no longer be officially supported as other Tether tokens.

The initial plan to freeze USDT on these blockchains raised concerns among users holding the stablecoin on those networks. The announcement urged users to redeem or migrate their tokens to supported blockchains to avoid losing access to their funds. The reversal provides some relief to those users, as they can still move their USDT.

Tether's initial decision was part of a broader strategy to optimize its infrastructure and focus on blockchains with greater scalability, developer activity, and community engagement. CEO of Tether, Paolo Ardoino, stated that sunsetting support for the legacy chains would allow the company to concentrate on platforms that drive the next wave of stablecoin adoption.

A review of USDT balances across the affected blockchains reveals that Omni Layer would be the most impacted, with a net circulation of $82.9 million USDT. Other networks have significantly smaller participation, with EOS having $4.2 million, Kusama having $240,000, and Algorand holding approximately $842,000 USDT. Bitcoin Cash SLP holds under $1 million USDT.

While Tether's change of heart prevents an immediate freeze, the long-term implications for USDT holders on these blockchains remain uncertain. The tokens will no longer be officially supported, potentially leading to decreased liquidity and wider acceptance. It also aligns with the industry's push toward more efficient and scalable solutions. Users are still encouraged to migrate their USDT to actively supported blockchains to ensure usability and avoid potential issues in the future.