By PYMNTS | December 9, 2022
Coinbaseis offering to convert USDT to USDC with no fees.
The firm said in a Thursday (Dec. 8)blog postthat the recent turmoil in the cryptocurrency markets had seen a “flight to safety,” even from fiat-backed stablecoins, which are cryptocurrencies pegged to reserve assets like the U.S. dollar.
“We believe that USD Coin (USDC) is a trusted and reputable stablecoin, so we’re making it more frictionless to switch: starting today we’re waiving fees for global retail customers to convert USDT to USDC,” Coinbase said in the post.
Coinbase said in the post that it co-founded USDC in 2018, that the coin is 100% backed by cash and short-dated U.S. treasuries and is always redeemable for 1:1 for U.S. dollars.
The firm added that USDC delivers transparency through monthly attestations from audit, tax and advisory firm Grant Thornton LLP.
“At Coinbase, we’re focused on stability and trust,” the post said. “Today’s announcement represents one step on that journey — enabling global customers to convert USDT to USDC with no fees. We’ll keep working to give our customers safe, responsible ways to hold and grow their crypto.”
As PYMNTS reported on Dec. 1, USDT, also known asTether, is one of the mostpopular stablecoinspegged to the U.S. dollar, with its $65 billion market value at the time making it the third largest cryptocurrency behind Bitcoin and Ethereum.
Reached for comment, Tether said the Coinbase offering is “wildly inappropriate” and demonstrates Coinbase’s “desperation” at a time when its market cap has lost $12 billion in the past three months.
“This isn’t an honest competitive rivalry,” Tether said in the statement. “This is a sad and desperate attempt from a company that is clearly suffering. The general conclusion on Twitter in response to their announcement is that this is a move borne out of desperation.”
The Wall Street Journalreportedon Dec. 1 that Tether has been lending its coins to customers.
As PYMNTS reported at the time, if Tether has been increasingly lending its own coins and not selling them instead for equivalent fiat, this adds to the risk that the company may not have enough liquid assets to weather a large redemption event.
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As a cryptocurrency enthusiast with a deep understanding of the market, let me provide you with insights into the article dated December 9, 2022, about Coinbase's move to convert USDT to USDC with no fees.
Firstly, the article mentions Coinbase's response to the recent turmoil in the cryptocurrency markets, describing it as a "flight to safety." This phrase refers to investors seeking stable assets amidst market volatility. Coinbase asserts that USD Coin (USDC) is a trusted stablecoin, and to facilitate a seamless switch, they are waiving fees for global retail customers to convert Tether (USDT) to USDC.
Here are key concepts discussed in the article:
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USDT (Tether): Tether is highlighted as one of the most popular stablecoins pegged to the U.S. dollar, with a $65 billion market value at the time of the article. It is positioned as the third-largest cryptocurrency behind Bitcoin and Ethereum.
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Coinbase's Announcement: Coinbase, a major cryptocurrency exchange, announces the conversion of USDT to USDC with no fees. The company emphasizes its focus on stability and trust in the crypto market.
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USDC (USD Coin): Coinbase mentions that it co-founded USD Coin in 2018. USDC is presented as a stablecoin that is 100% backed by cash and short-dated U.S. treasuries, making it redeemable for U.S. dollars at a 1:1 ratio. Transparency is claimed through monthly attestations from the audit, tax, and advisory firm Grant Thornton LLP.
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Transparency Measures: Coinbase emphasizes its commitment to stability and trust, highlighting the transparency of USDC through regular attestations from a reputable auditing firm, Grant Thornton LLP.
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Tether's Response: Tether, in response to Coinbase's move, criticizes it as "wildly inappropriate" and indicative of Coinbase's "desperation." Tether suggests that Coinbase's market cap loss of $12 billion in the past three months is driving this decision.
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Tether's Business Practices: The article touches on Tether's lending practices, stating that Tether has been lending its coins to customers. It raises concerns that if Tether is lending rather than selling its coins for fiat, it may face risks related to not having enough liquid assets in the event of a large redemption.
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Market Dynamics: The Wall Street Journal had reported on December 1 that Tether has been lending its coins to customers, contributing to market discussions on Tether's risk exposure.
In conclusion, Coinbase's strategic move to waive fees for converting USDT to USDC reflects its commitment to providing stability and trust in the cryptocurrency market. Tether's response adds a layer of controversy, pointing to the competitive dynamics and potential challenges in the stablecoin market, especially concerning Tether's lending practices.
