Coinbase, America’s largest cryptocurrency exchange, does not want its customers to use the Tether stablecoin. Instead, it is providing incentives for its own stablecoin, USDC.
Coinbase urged its customers to “switch to the trusted and reputable digital dollar: USDC” in a blog post published on December 8.
It went on to say that USDC is one of the most trusted and reputable stablecoins, fully backed by “high-quality reserves,” a dig at rival stablecoin Tether, which is still the market leader.
Furthermore, Circle, a Coinbase-affiliated company that co-founded the stablecoin in 2018, issues USDC. To encourage customers to make the switch, Coinbase has implemented zero-fee transfers between USDT and USDC.
Customers, according to Coinbase, value stability and trust now more than ever. Many users appear to agree that USDC’s market share has increased at the expense of USDT in the last year or two.
It also stated that USDC provides transparency through monthly attestations by Grant Thornton LLP, one of the largest audit, tax, and advisory firms in the United States.
“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 release a full audit, but it insists that its reserves are fully backed. On December 2, the firm lashed out at mainstream media misinformation about rising loan risks.
The majority of Coinbase’s revenue comes from above-industry-average transaction fees. The move to free transfers is surprising given that revenue has plummeted this year due to bearish market conditions and low volatility.
BeInCrypto reported on December 8 that Coinbase CEO Brian Armstrong predicted the company would make half of its 2021 revenue this year. Furthermore, its stock has dropped by more than 80% since the start of the year.
Samson Mow, a Bitcoin pioneer, and early adopter issued a warning:
“Always beware when companies offer free stuff. The door in is usually big, but the door out is small.”
Tether is still the king of stablecoins, despite its declining market share. According to CoinGecko, USDT currently controls 46% of the total stablecoin market. There are also 65.7 billion USDT in circulation.
Circle’s USDC has approximately 42.8 billion coins in circulation, giving it a 30% market share. The total market capitalization of all stablecoins is approximately $142 billion. It now accounts for nearly 16% of the total crypto market cap.
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