Leading U.S. crypto exchange Coinbase announced Friday that its global retail users can now convert their Tether USD (USDT) holdings into Circle’s USD Coin (USDC) without commission fees. The company cited the trust and reputation of USDC as the reason for the action.
USDC Over USDT
Stablecoins are designed to maintain a 1:1 peg to an asset’s price. In the case of USDC and USDT, they are designed to keep a peg to the price of $1. However, a few days after the collapse of the once-giant crypto empire FTX, the Tether stablecoin lost its peg, dropping below $1.
Possibly referring to the price drop of USDT and other events, Coinbase said the following in its statement:
“The events of the past few weeks have put some stablecoins to the test and we’ve seen a flight to safety. We believe that USD Coin (USDC) is a trusted and reputable stablecoin.”
Recall that Coinbase partnered with financial services firm Circle to launch USDC in 2018.
Several users of the crypto community on Twitter were not impressed by the latest move taken by the American exchange. One user noted that Coinbase looks desperate with its latest move. The user also declared reduced trust in USDC. Another user believes that people in the United States would prefer USDT over USDC.
Meanwhile, leading crypto exchange Binance made a significant move regarding stablecoins in September. Binance introduced its BUSD Auto-Conversion system. With this process in place, the holdings of Binance users with USDC, USDP, and TUSD, will be automatically converted into Binance USD (BUSD).
Regulations Over Stablecoin
In June, the algorithmic stablecoin belonging to the Terra network, UST, crashed and lost almost 100% of its value. After this event, matters involving the genuine stability of stablecoins came to light. This affected the trust that users have in the asset class. Regulatory authorities across several regions have also begun to probe the asset class.
In October, the chairman of the U.S. Securities and Exchange Commission (SEC) noted that the U.S. Congress should extend the authority of the Commodity Futures Trading Commission (CFTC) jurisdiction to include stablecoin regulation.
Other regulatory authorities have also commented on the matter of stablecoin regulation.
