United States-based cryptocurrency exchange Coinbase has asked its customers to convert their Tether-issued USDT (USDT) stablecoin to USD Coin (USDC), a USD-pegged stablecoin issued by Circle and co-founded by Coinbase in 2018.
The cryptocurrency exchange suggested that USDC is a much more secure alternative in the wake of the FTX collapse saga and has also exempted any fee on the conversion of USDT to USDC on its platform. The firm said:
“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.”
Stablecoins started out as an onboarding tool for the crypto exchanges in the early days of crypto, but today they have become a key market player and liquidity source. However, there has always been some form of scrutiny around their reserves backing these stablecoins. A stablecoin, by definition, must be backed by 1 USD or equivalent.
The reserve debate intensified in the aftermath of FTX collapse as many firms with exposure to the tainted exchange and its sister company Alameda Research went bankrupt. There was another allegation about Binance CEO Changepeng Zhao trading barbs with former FTX CEO Sam Bankman-Fried and accusing him of trying to depeg USDT.
post-strike FTX scoop: Just before the bankruptcy, @cz_binance accused @SBF_FTX of trying to drive down the price of Tether. They traded barbs in a group chat with other crypto execs. “The more damage you do now, the more jail time,” CZ said. https://t.co/OTlYgoEruJ