A new controversy has fueled the rivalry between USDT and USDC, the two biggest stablecoins on the market. Coinbase, the exchange that supports USDC, asked users to switch their reserves from USDT to USDC. According to the exchange, USDC is a “trusted and reputable stablecoin” and has the most secure audit. But Paolo Ardoino, director of technology at Tether (CTO) did not leave it cheap. Tether’s CTO – which issues USDT – has criticized Brian Armstrong’s company’s stance. Other users also questioned why Coinbase took this stance. As a result, the company’s decision sparked a long debate on Twitter.
Coinbase tries to promote USDC
On Thursday (8), Coinbase published a text on its official blog asking users to convert their USDT into USDC. To assist in the “transition,” the exchange said it will zero transaction fees on the USDT/USDC pair. Coinbase claims that USDC is a reliable and reputable stablecoin and offers customers stability and confidence in times of volatility. In this regard, the company also attacked the rival stablecoin, especially the issue of Tether reserves. According to Coinbase, the quality of reserves backing USDT is questionable, as the stablecoin has depreciated slightly during volatile market conditions. And indeed the USDT even lost parity with the dollar after the Earth collapsed in May. Furthermore, USDT also dropped during the FTX meltdown and dropped below $0.95. Another issue is that Tether has been questioned in the past for the quality of its reserves. After the Earth collapsed, the company began to make changes to the ballast, looking for safer assets. In contrast, Coinbase rates USDC as a “reputable and reliable stablecoin,” backed by cash and short-term U.S. Treasuries. Furthermore, it allows customers to earn up to 1.5% annually by leaving their USDC on Coinbase. Blockchain data indicates that USDT is the third most traded cryptocurrency on Coinbase. Its volume represents 5% of the total volume traded on the platform. Tether CTO Paolo Ardoino criticized Coinbase’s decision to ask its users to convert USDT to USDC. Other Twitter users also questioned Coinbase’s move. Gabor Gurbacs, director of digital asset strategy at VanEck, claims that Tether is trusted by millions worldwide and people will choose USDT over USDC. On the other hand, Samson Mow questioned Coinbase’s decision and warned users. “Always be careful when companies offer free stuff. The entry door is usually big, but the exit door is small,” he said.
USDC Market Cap Keeps Declining
Recently, USDC came under fire after Circle started censoring transactions using the stablecoin. Its value remains at US$ 1, but the total market value has dropped in recent months, from R$ 250 billion to the current R$ 233 billion. In other words, users are converting more USDC into USD, which reduces the stablecoin’s market cap. USDT, on the other hand, remains the largest stablecoin in market value, with R$ 343.4 billion. But USDT’s market cap also dropped during Earth’s fall, albeit at a slower pace, dropping by around R$370 billion.