Coinbase, the second-largest cryptocurrency exchange in the world, is incentivizing its users to switch. Users that convert their USDT to USDC won’t pay any transaction charges. The move could herald the start of a new phase in the competition for stablecoin supremacy.
The exchange wrote in a blog post that the recent events had placed some stablecoins to a test and caused a flight to safety. However, Coinbase believes that Circle’s stablecoin, USDC is more reliable and trustworthy than its famous rival.
Centre, a group established to advance broader stablecoin adoption, is in charge of managing USDC, which was introduced in 2018. The consortium’s founding members are Coinbase and Circle, a financial services provider with headquarters in Boston.
According to data from Coingecko, USDC has a market cap of about $43 billion, making it the second-biggest stablecoin behind Tether’s USDT. In addition, Coinbase claims that USDC’s “uniqueness” lies in its being redeemable for US Dollars USD 1:1 thanks to its 100% backing by fiat and short-term treasury bonds held in licensed financial institutions across the US.
Customers want transparency, and according to Coinbase, USDC provides it. It also noted that eligible customers’ earnings could rise to 1.5% APY for staking their USDC tokens on Coinbase. In addition, monthly attestations are provided by Grant Thornton LLP, one of the US’ largest audit, tax, and advisory firms.
Tether’s Unending Issues
Meanwhile, a US judge in New York ordered Tether to produce financial records of its USDT reserves three months ago. However, this is not related to the lawsuit pending before the New York Supreme Court, which requests the release of the records the New York Attorney General gathered during its investigation into Tether’s reserves.
After FTX’s demise last month, Tether’s USDT briefly lost its parity with the dollar, trading at almost $0.97 a few days after the FTX crash. Tether commented on the de-pegging, saying there may be fluctuations in the USDT trading price listed by exchanges during market turbulence.
Hence, it has nothing to do with Tether’s inability to lose or preserve its peg or its reserves’ amount or composition. Tether further argued that the de-pegging occurred because of a greater demand for liquidity than what was available on that exchange’s order books.
Tether announced in October that the company had replaced its holdings of commercial paper with US Treasury Notes. Meanwhile, USDC has had its issues in the last couple of weeks. Binance, the world’s largest crypto exchange, which owns a rival stablecoin, BUSD, announced the discontinuation of its support for USDC and two other stablecoins.
Binance automatically converted any users’ USDC, USDP, and TUSD balances to the BUSD. Circle acknowledged in its latest SEC filing that the insolvency of FTX and the automatic swap of USDC to BUSD on Binance could lower the company’s performance compared to its February forecasts.
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