America’s largest crypto exchange, Coinbase, doesn’t want its customers to use the Tether stablecoin. It’s instead offering incentives on its own stablecoin, USDC.
In a company blog post on Dec. 8, Coinbase urged its customers to “switch to the trusted and reputable digital dollar: USDC.”
It added that USDC is one of the most trusted and reputable stablecoins, fully backed with “high-quality reserves.” The move was a shot at rival stablecoin Tether, which remains the market leader.
Furthermore, USDC is issued by Circle, a Coinbase-affiliated company that co-founded the stablecoin in 2018. Coinbase has now initiated zero fee transfers between USDT and USDC to urge customers to make the change.
Coinbase Dropping Transfer Fees
Coinbase reiterated that stability and trust were of the utmost importance to customers, now more than ever. USDC’s market share has grown at the expense of USDT’s over the past year or two, so many users appear to agree.
It added that USDC delivers transparency via monthly attestations by Grant Thornton LLP, one of America’s largest audit, tax, and advisory firms.
“USDC is unique in that it’s 100% backed by cash and short-dated U.S. treasuries held in U.S. regulated financial institutions.”
Tether has yet to issue a full audit but maintains that its reserves are also fully backed. On Dec. 2, the firm lashed out at mainstream media FUD regarding rising loan risks.
Coinbase makes the lion’s share of its revenue from above-industry-average transaction fees. The free transfer move comes as a surprise since that revenue has tanked this year due to bearish market conditions and low volatility.
On Dec. 8, BeInCrypto reported that Coinbase CEO Brian Armstrong predicted the firm would make half the 2021 revenue this year. Furthermore, its stock has tanked more than 80% since the beginning of the year.
Bitcoin pioneer and early adopter Samson Mow offered words of caution:
“Always beware when companies offer free stuff. The door in is usually big, but the door out is small.”
Stablecoin Ecosystem Outlook
Though its market share has diminished, Tether is still the king of stablecoins. USDT currently commands 46% of the total stablecoin market, according to CoinGecko. Additionally, there are 65.7 billion USDT in circulation.
Circle’s USDC has around 42.8 billion coins in circulation, giving it a market share of 30%. The total market cap of all stablecoins is around $142 billion. It currently accounts for almost 16% of the entire total crypto market cap.
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