It's mainly built for users in LatAm, where the easiest way to escape their currencies and transact is in USDT (usually over Tron).

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Well that’s good, but it doesn’t change that they very, very likely **can** record all of that information if they chose. I suspect for usability it’s just requesting information directly from their nodes. Unless it’s neutrino of something, maybe we will have a better idea when it’s open sourced. Would be really awesome if it was neutrino based, but I doubt it.

Personally I won't use any wallet that cannot be connected to my electrum server, but I understand that they are solving real issues in LatAm with this product. Anyway, they just launched and it is practically a beta. No dark mode ffs! Lol

This is an important point. And it's hard to weigh trade-offs where some things are a slippery slope but other things are worth the risks. I have never been completely comfortable with blockstreams relationship with tether but I also see that there are real world reasons why it is useful like the one just described.