Nasdaq-listed cryptocurrency exchange Coinbase Global Inc (NASDAQ:COIN) backs USD Coin (USDC), a stablecoin issued by Circle, and is the issuer of USDT, the world’s largest stablecoin. It hits its weight against Tether.
In a blog post, Coinbase said, “The events of the past few weeks have tested several stablecoins and seen a flight to safety,” adding: .”
To facilitate the conversion from USDT to USDC, Coinbase waives all conversion fees for customers worldwide.
Coinbase promotes USD Coin for good reason. The exchange is a founding member of The Center Consortium, the governing group for stablecoins.
But there are real reasons to consider switching.
Circle has been particularly committed to its transparency through monthly certification reports compiled by global accounting firm Grant Thornton.
These reports do not constitute an actual audit, but disclose any reservations The Circle may have.
According to Grant Thornton’s latest attestation report, Circle holds US$43.75 billion in reserves against US$43.5 billion in USDC circulation.
Not all reserves are held in cash. About 70% is held in cash equivalents, short-term US Treasuries.
Tether controversy
Tether will also release a monthly certification report provided by independent auditor BDO. That first report was carried out only in his August of that year. Prior to that, Tether conducted internal audits.
All USDTs are theoretically 1:1 backed, but they are constructed a little differently.
Read more: Tether Releases First Certification Report by BDO
About 80% of Tether’s reserves are made up of cash and cash equivalents, 71% of which are US Treasury bills, and only 11% of dollars are actually in the bank.
Another 14% of USDT is backed by secured loans and other investments, which may not be liquidated immediately in the event of a bank run, and nearly 5% is corporate bonds, funds and precious metals. .
Tether has significantly reduced its reliance on unsecured loans after 2021 – Source: tether.to
Tether reserves have caused a lot of controversy in 2021. The New York Attorney General has ruled that Tether misled the public about its secured position.
USDT was almost entirely collateralized by commercial paper (unsecured debt) rather than cash or cash equivalents.
Tether aims to have zero commercial paper by the end of 2022, most of which have been saved at a few percent.
Despite Coinbase’s announcement, USDT’s market capitalization hasn’t actually declined and is currently at US$66 billion compared to USDC’s US$43.5 billion.
