- Coinbase posted a blog encouraging people to convert their USDT to USDC at no cost.
- The exchange implicitly targeted Tether (USDT) for the adequacy of its reserves.
Coinbase, a cryptocurrency exchange, has urged its customers to transfer from Tether (USDT) to Circle’s USD Coin (USDC), calling the latter a “trusted and reputable stablecoin.” The underlying reason for the transition is unclear, but Coinbase feels recent events have prompted the move.
On December 8th, Coinbase posted a blog encouraging people to convert their USDT to USDC at no cost. Moreover, according to Coinbase, USD Coin (USDC) is an established and reliable stablecoin that gives users peace of mind in uncertain market conditions.
Credibility of Tether’s Reserves
During periods of market volatility, Coinbase implicitly targeted Tether (USDT) for the adequacy of its reserves, which had somewhat depegged. During the FTX crash, the USDT depegged and fell to a price below $0.95. In addition, the credibility of Tether’s reserves has been called into doubt.
Based on the data available, USDT is the third most traded cryptocurrency on Coinbase, making up around 5% of the total volume.
Coinbase claims that recent events have tested certain stablecoins, prompting them to move to USDC, which it co-founded in 2018. The USDC stablecoin is backed by cash and short-term U.S. treasuries held in financial institutions supervised by the Federal Reserve System and other federal agencies in the United States. Furthermore, Coinbase clients may earn up to 1.5% APY on their USDC holdings.
Paolo Ardoino, CTO of Tether, has spoken out against Coinbase’s intention to force customers to exchange USDT for USDC. Coinbase’s decision has been questioned by several community members as well. Trading volume on Coinbase has been declining for a long time with the recent FTX fall causing a huge dent.
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