​Coinbase cancels the fee for converting USDT to “trusted” USDC

What’s new? Representatives of the Coinbase cryptocurrency exchange have released a note calling for the conversion of the Tether (USDT) stablecoin to USD Coin (USDC). The latter, according to the statement, is more “trusted and reputable.” Thus, the exchange has waived fees for retail customers around the world to convert USDT to USDC. Assets can be exchanged on the site or in the platform’s mobile app. Notably, Coinbase is the co-founder of USDC.

Coinbase Blog

What else does the statement say? Stablecoins pegged to fiat currencies provide customers with confidence in times of increased market volatility. However, “the events of the past few weeks have put some stablecoins to the test,” the blog says.

What makes USDC unique is that the coin is 100% backed by cash and short-dated US treasuries held in regulated financial institutions in the US. Stablecoin can always be exchanged at a 1:1 ratio for dollars.

According to the statement, USDC representatives provide transparency through monthly audits conducted by the accounting firm Grant Thornton. In addition, the annual percentage yield on holding USDC on Coinbase can be as high as 1,5%.

Community reaction. The call has elicited mixed reactions from the crypto community. For example, Gabor Gurbacs, an analyst at VanEck, said on Twitter that Tether is the first stablecoin and is trusted by millions of people around the world. He believes that users are more likely to prefer USDT over USDC.

Tether was the first stablecoin in the world and has been trusted by millions around the world since its inception. In fact if you ask people outside a narrow group in the US they’d pick tether over USDC. — Gabor Gurbacs (@gaborgurbacs) December 9, 2022

Gurbacs previously reported that investors transferred about $1 billion from USDC to USDT between July and August. This came as Circle, the issuer of USDC, blocked user funds associated with the Tornado Cash crypto mixer, against which US authorities imposed sanctions.

In September, the New York court ordered Tether to provide financial records on USDT collateral. The order could be linked to allegations that the company “inflate the market.” The WSJ reported in December that Tether began lending its customers more in USDT instead of selling the coins for hard currency. This increases the risk that the company will not have enough liquid assets to redeem them in a crisis.

USDT and USDC are the largest centralized stablecoins in the cryptocurrency market. As of December 9, the assets are capitalized at $65,7 billion and $42,75 billion, respectively.