The crypto market is in turmoil, and many are looking to cash out of their stablecoins amid unprecedented volatility.
After UST lost its peg earlier this week, USDT is now struggling to retain its dollar peg on several centralized exchanges. Tether claims that USDT can be redeemed at any time on tether.to for $1. However, many users are likely unfamiliar with how to achieve this.
How to redeem on Tether’s website
To redeem Tether for fiat currency, users must go through a few steps before sending it to their bank account. However, there is a big catch that Tether fails to put in its marketing; users have to pay $150 for “verification,” and the minimum transaction amount is $100,000.
Additionally, U.S. citizens must be classified as Eligible Contract Participant to redeem USDT via the website.
You must first make an account on Tether’s website which is tether.to. You only need to provide your name, country, and state at this point.
Once you have done that, it will ask you to verify your email address. This is done by simply clicking on a link sent to your email address.
Next, you will be asked to add two-factor authentication using a third-party app such as Google Authenticator.
At this stage, you must complete the KYC process in order to add a bank account. The fee for this is $150. Charging a fee for KYC is extremely unusual, Tether states that “the verification fee is intended to ensure that only those who are serious about establishing an account apply. The fee also helps offset a portion of the incurred costs from the execution of a robust verification process.”
Users can generate an ERC20 deposit address to send USDT, EURT, or CNHT and an Omni address to send just USDT. It is important to note that the minimum deposit amount is $100,000.
Upon transferring Tether tokens to a deposit address, users can add a bank account to withdraw fiat currency. The next catch comes in the fact that Tether charges a 0.1% fee for withdrawals up to a maximum of $1,000, which means Tether is redeemable at $0.99 for up to $1 million, and then $1 above $1million in terms of money in the bank.
U.S. retail investors excluded
Further, the terms and conditions state that U.S. citizens are prohibited from using the tether.to site. Any U.S. person is a customer of Tether Limited rather than Tether International Limited.
Any individual who is a U.S. Person and any entity that is a U.S. Person is prohibited from using the Site or any Services, including but not limited to using a Digital Tokens Wallet on the Site. Exceptions to this policy may be made by Tether, in its sole discretion, for Eligible Contract Participants only, which shall be customers solely of TLTD.
The wording also suggests that the only U.S. parties who can interact with Tether Limited are “Eligible Contract Participants.”
As defined by section 1a(18) of the United States Commodity Exchange Act, this only includes individual investors with more than $10 million, individuals with $1 million net worth, financial institutions, insurance companies, and investment companies.
This appears to be even stricter than the regulations for accredited investors meaning that individuals with an income of at least $200k are also excluded.
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