1. Choose a Crypto Exchange
To purchase Tether (USDT), or any digital currency, you’ll need to set up an account with a reputable cryptocurrency exchange.
There is a multitude of exchanges available to Australian investors, with options based both domestically and overseas. For newcomers, selecting an exchange that provides a user-friendly interface, minimal fees, and robust security measures is advisable. For more experienced investors, more sophisticated platforms with advanced trading tools will likely be a better fit.
When choosing an exchange, be sure it gives access to Tether. As it is the third largest cryptocurrency, this shouldn’t be too tricky.
2. Sign up and Get Verified
Once you’ve chosen your exchange, the next step is to create an account. Due to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws in Australia, crypto exchanges must go through a Know-Your-Customer (KYC) process for new users. This will typically involve providing personal details, government identification documents, tax file number (TFN) and potentially proof of address.
While this can seem strange to many new to the crypto space, it can be thought of as similar to setting up a bank account. Banks must also comply with similar financial regulations, and the fact that crypto exchanges do this helps to ensure the security of your transactions and adherence to anti-money laundering laws.
3. Decide on a Payment Method
After signing up and being verified by your chosen exchange, you must deposit funds into your account to buy Tether. The funding options available on the exchange might include bank transfers from checking or savings accounts, PayPal, a crypto wallet, or even credit or debit cards.
Using a credit card for crypto purchases should be done with caution due to potential additional transaction fees.
To maximise your investment (and its growth potential), opting for electronic transfers from a bank account over other methods is often more financially prudent. Additionally, purchasing cryptocurrency with a credit card is typically treated as a cash advance, attracting higher interest rates than regular purchases. Engaging in debt to acquire speculative assets like cryptocurrency carries significant risk.
4. Place an Order
With a funded account, you can now place a buy order. The process varies by platform: some allow a straightforward purchase with a button click, while others may require you to input USDT’s ticker symbol. Specify the amount you wish to buy. Upon completing the transaction, you will own a share of Tether.
Given Tether’s peg to the US dollar, your investment translates directly to the equivalent amount in USDT, mirroring the investment process for traditional currencies rather than the fluctuating valuation standard with other cryptocurrencies.
As an Australian investor, the most notable fluctuation in your Tether’s value will directly correlate with the AUD to USD conversion rate. As AUD falls against the USD, your investment will increase in AUD terms. The inverse is also true if the AUD gains strength against the USD.
5. Select a Safe Storage Option
Many exchanges offer an integrated Tether wallet or suggest a preferred third-party wallet for storing your USDT. Nonetheless, some investors are wary of keeping their digital currencies online due to the risk of theft by hackers.
Many leading exchanges provide private insurance to cover losses from such incidents and increasingly opt to keep the bulk of customer assets in “cold storage”—offline and away from potential online threats. However, even with these precautions, the risk of loss remains, as highlighted by the collapse of once-trusted exchanges like FTX.
For enhanced security, store your Tether in a personal wallet, away from the exchange. Wallet options range from custodial and software to hardware wallets, each offering varying levels of security. While custodial wallets offer convenience, they pose similar risks to those of centralised exchanges. Though more secure since they eliminate third-party risks, software wallets can still be vulnerable to online threats.
Hardware wallets, which store private keys offline on a physical device, represent the safest option for storing significant amounts of USDT, requiring physical transaction confirmation. However, using a non-custodial private wallet does require security best practice as it is up to you to store your passphrase and keep it safe.
Remember, transferring your USDT to a different wallet may incur a small fee, emphasising the importance of selecting the most secure and convenient storage option for your needs to start with so you can avoid transferring multiple times.
Related: Best Crypto Wallets for Australians