Tether Leads $7M Series A in Pact Labs to Build Stablecoin Payroll Infrastructure for US Workers

Tether, the issuer of the world's largest stablecoin by market cap, has led a $7 million Series A funding round in Pact Labs, a startup building a stablecoin-based payroll and credit infrastructure aimed at millions of unbanked and underbanked American workers. The round also saw participation from Blockchange Ventures and Lasagna, with the funds earmarked to accelerate the development of a payment system that leverages Tether's regulated stablecoin, USAT, issued in partnership with Anchorage Digital Bank. The investment marks a strategic pivot for Tether, which has long been criticized for its opaque reserves and limited real-world utility outside of crypto trading. By backing Pact Labs, Tether is betting that its compliant stablecoin can penetrate the $6 trillion U.S. payroll market, offering employers a faster, cheaper alternative to traditional direct deposit while providing workers with instant access to earned wages and short-term credit. Pact Labs aims to bridge the gap between the crypto ecosystem and mainstream financial services by offering an API-first platform that allows employers to disburse salaries in USAT directly to workers' digital wallets. Workers can then use the same infrastructure to withdraw cash, make purchases, or access payday advances at lower interest rates than conventional lenders. The model specifically targets the approximately 6 million American households that lack access to a bank account, forcing them to rely on expensive check-cashing services and predatory payday loans. "We are excited to support Pact Labs in their mission to bring the efficiency of blockchain technology to payroll," said Paolo Ardoino, CTO of Tether, in a prepared statement. "USAT is designed for exactly this kind of use case—regulated, stable, and instant. By integrating it into everyday wage distribution, we can offer millions of workers financial freedom they’ve never had." Pact Labs' technology stack is built around USAT, a fully reserved stablecoin issued by Tether and held in custody by Anchorage Digital Bank, a federally chartered digital asset bank supervised by the U.S. Office of the Comptroller of the Currency (OCC). This structure gives Pact Labs a clear regulatory path, as Anchorage provides the required KYC/AML controls and custodian oversight. However, the startup itself must still obtain money transmitter licenses across all 50 states and comply with state-level wage and lending laws—a daunting challenge that has sunk many fintech payroll projects before. The funding announcement comes at a time when stablecoin usage is diversifying beyond mere trading and DeFi. Circle’s USDC has already been integrated into payroll solutions via partnerships with Stripe and MoneyGram, while PayPal’s PYUSD is being tested for merchant settlements. Tether, however, has been slower to pivot into real-world payments, focusing instead on emerging markets and cross-border remittances. The Pact Labs investment signals a change in strategy: a direct assault on the U.S. payroll market, arguably the most sensitive and regulated segment of consumer finance. Despite the regulatory complexity, the opportunity is massive. According to the Federal Reserve, over 80% of U.S. workers are paid via direct deposit, a system that can take one to three business days to settle. A stablecoin-based system can settle transactions in seconds, allowing workers to access their wages immediately without waiting for bank processing. For employees living paycheck to paycheck, even a one-day delay in access to funds can mean overdraft fees or missed bill payments. Pact Labs promises to eliminate that friction by enabling same-day settlement with no intermediaries. Beyond payroll, Pact Labs plans to offer a “wage advance” feature—essentially a payday loan issued on-chain. Unlike traditional payday lenders that charge annual percentage rates (APRs) exceeding 400%, Pact Labs claims its smart contract-based credit algorithm can underwrite small loans at single-digit APRs by using the worker’s future wage as collateral. The loans are repaid automatically on the next pay cycle. This model has the potential to disrupt a $9 billion predatory lending industry, but it also brings intense scrutiny from the Consumer Financial Protection Bureau (CFPB), which has flagged crypto-based wage advances as a compliance risk. “The payroll infrastructure space is littered with failed startups that underestimated the regulatory burden,” said Sarah Wang, partner at Blockchange Ventures, in a blog post. “Pact Labs has the benefit of building on a regulated stablecoin and working with a bank-grade custodian from day one. That gives them a head start over purely crypto-native projects.” The investment amount—$7 million—is relatively modest compared to Tether’s reported $10+ billion in profits, but the strategic implications are significant. If Pact Labs can secure even a handful of large employers as clients, it would transform USAT from a niche token into a mainstream payment rail. Conversely, a failure would reinforce the narrative that stablecoins cannot escape the shadow of regulation. For now, Pact Labs remains in stealth mode regarding its team and clients. No details have been provided about the founders’ backgrounds or whether any pilot programs are underway. This lack of transparency is a red flag for a company handling wage data and credit history, especially given the sensitivity of U.S. labor laws. Industry observers will be watching for the release of a detailed regulatory compliance roadmap, along with evidence of state-specific money transmitter licenses. The Series A round values Pact Labs at an undisclosed amount. The company says it will use the funds to hire compliance officers, engineers, and business development staff, as well as to initiate the licensing process in key states like California, Texas, and New York. A public beta is expected within 12 months. In the broader context, Tether’s move into payroll is part of a larger trend where stablecoin issuers are seeking to embed their tokens into real-world financial rails to defend against the rise of central bank digital currencies (CBDCs) and competing stablecoins. The success or failure of Pact Labs will provide a crucial data point for regulators, banks, and investors assessing whether stablecoins can genuinely serve vulnerable populations without causing systemic risk. “This is not just a funding round; it’s a litmus test for regulatory innovation,” said James Lee, a policy analyst at the Digital Dollar Project. “If a private stablecoin payroll system can survive state-level scrutiny, it will set a precedent that could accelerate the adoption of digital dollars—whether private or public—in wage distribution.” As of press time, Tether’s USDT market cap remains above $110 billion, and the price of USAT is pegged at $1.00. Pact Labs has not disclosed its tokenomic plans, and industry experts believe the company will not issue its own native token, instead passing all transaction fees in USAT. This structure simplifies compliance but also means the company's valuation relies entirely on its ability to generate revenue from service fees. For the nearly 6 million unbanked workers in the U.S., the promise of an instant, fee-free payroll solution is tantalizing. But whether Pact Labs can navigate the regulatory maze and deliver on that promise—while avoiding the pitfalls that have plagued similar projects—remains to be seen. One thing is certain: Tether is betting big that stablecoins are ready for prime time, and U.S. workers are the ultimate test case.