Coinbase Erases USDT-to-USDC Transfer Fees In Bid to Encourage Customers to Switch

Popular cryptocurrency exchange Coinbase has removed transfer fees for customers looking to convert their USDT to USDC on its platform in a bid to spur the adoption of the latter. 

A More Trustworthy Option

On Tuesday, the popular crypto exchange shared a blog post urging customers to ditch the popular Tether(USDT) stablecoin in favor of its competing USDC product. The company brought up USDT’s sketchy history of proving its reserves, explaining that trust is especially important at this time and that customers need a stablecoin they can trust amid the market downturn. 

USDC, a stablecoin product co-founded by Coinbase and financial services company Circle, is the second-largest stablecoin in the market. As the first stablecoin in the market, USDT has a lengthier history and has continued to build significant trust among investors. The digital asset is known for its relative transparency, especially regarding reserves, making it a more trustworthy option for most investors in the market. However, USDT has continued to enjoy the benefit of incumbency. 

This means that USDC has never been able to knock USDT off its perch as the most valuable stablecoin in the market. Of course, this isn’t for lack of trying; USDC and other stablecoins have continued to nibble off USDT’s market cap over the years.

Data from CoinMarketCap shows that while USDT’s market cap has consistently dropped from $75.8 billion to $65.61 billion this year, that of USDC has slightly surged from $42.4 billion to $42.81 billion. 

Nevertheless, Coinbase highlighted USDC’s reputation as arguably the most trustworthy and transparent stablecoin in the market, adding that the asset is backed with “high-quality reserves,” a dig at its competitor. Coinbase specifically pointed out that it delivers transparency via monthly financial audits by Grant Thornton LLP, one of the largest tax, audit, and advisory firms in the United States. 

Also, the exchange has confirmed that it would allow customers to switch between both stablecoins at no cost, as it has initiated zero charges for transfers from USDT to USDC via its platform.

Everyone Feels the Bear Market’s Brunt

The new move is just the latest attempt by USDT’s competitors to knock the asset off its perch. This year alone, USDT has been hit by multiple questions concerning its stability and ability to hold its peg against the dollar.

Amid the FTX insolvency saga last month, evidence showed that the embattled exchange and sister company Alameda Research had tried to short the stablecoin. The asset briefly lost its dollar peg, hitting a lot of $0.971. However, it was soon back to parity with the greenback, while its developers decried the moves by market participants to destroy the asset. 

Paolo Ardoino, the technology chief at Tether Limited, pointed out that the asset had processed over $700 million of withdrawals on the day of the report without suffering any outages. Echoing the same sentiment, Tether Limited said in a blog post that it was financially stable and had no exposure to either Alameda or FTX. 

#tether processed ~700M redemptions in last 24h.
No issues.
We keep going.

— Paolo Ardoino 🍐 (@paoloardoino) November 10, 2022

 

Of course, this new sentiment by Coinbase is also coming at a time when the exchange has felt the bear market’s brunt. The company has already been through two layoffs, first letting go of 17% of its staff and then firing 60 employees from its recruiting and institutional onboarding departments last month. 

As Coinbase looks to weather the crypto winter, the company will now be looking to bolster its product even more.