Coinbase asks users to convert their USDT to USDC for free

Coinbase is incentivizing its users to convert their Tether (USDT) holdings for USD Coin (USDC), according to a Dec. 8 blog post.

Switch to a trusted stablecoin: USD Coin (USDC). Now convert Tether (USDT) to USDC with zero fees.https://t.co/OObSqNWdpj

— Coinbase (@coinbase) December 8, 2022

According to the US-based exchange, recent events have shown that customers needed stability and trust in fiat-backed stablecoins in times of volatility. Because of this, it revealed that it was waiving its fees for the conversion.

Coinbase said USDC was fully backed with “high-quality reserves,” adding that it delivers transparency via “monthly attestations by Grant Thornton LLP.”

Tether has been subject to several regulatory scrutinies over its failure to provide adequate transparency over its reserves. The stablecoin issuer recently said it has cut down its commercial paper holdings to zero and will invest more in U.S. Treasury Bills and short-term government-issued debt.

Crypto community wary of Coinbase’s offering

Several stakeholders in the crypto community have questioned Coinbase’s motive, with some describing the move as “desperate.”

Not a good look. Also looks desperate.

Makes me trust USDC a little less tbh.

— Byzantine General (@ByzGeneral) December 9, 2022

The strategy advisor at VanEck, Gabor Gurbacs, said:

“Tether was the first stablecoin in the world and has been trusted by millions around the world since its inception. In fact if you ask people outside a narrow group in the US they’d pick tether over USDC.”

Tether’s CTO Paolo Ardoino retweeted Gurbacs’ statement. He also retweeted James Viggy’s statement that questioned how Coinbase has invested in the Bitcoin ecosystem development.

Meanwhile, BTC’s early investor Samson Mow opined that users should beware of companies that offer free stuff because “the door in is usually big, but the door out is small.”

Always beware when companies offer free stuff. The door in is usually big, but the door out is small.

— Samson Mow (@Excellion) December 9, 2022

Tether remains the market leader

According to CryptoSlate data, Tether is the dominant stablecoin in the industry. It controls around 50% of the market, and its supply is over $65 billion. As of press time, USDT is responsible for 75% of stablecoin’s trading volume.

On the other hand, USDC is the second-largest stablecoin, with a circulating supply of $42.7 billion. Its supply shrunk by $10 billion following Binance’s decision to convert its users’ balance in USDC to BUSD.