By Michael Scott
Coinbase crypto exchange announced a new campaign to forego imposing conversion fees for stablecoin users switching USDT for Circle-owned USD Coin (USDC).
Coinbase announced launching a zero-fee conversion campaign to encourage users to embrace the Circle’s trusted stablecoin USDC. The announcement published on the Coinbase blog post referred to the previous weeks’ events where some stablecoins portrayed vulnerabilities to the market slowdown. The December 9 announcement revealed that USD Coin passed the test, unlike other stablecoins that flew to safety. Further, the Friday morning post revealed Coinbase considered USDC a reputable stablecoin.
Encroaching USDT
Coinbase confirmed scrapping the fees imposed when global retail clients convert from one stablecoin to another. The USDC co-founder encouraged holders of troubled Tether (USDT) to exploit the window granted for zero-fees conversion.
Meanwhile, on-chain data ranks USDT third among the widely traded stablecoins on the Coinbase exchange platform. A scrutiny of the data indicates USDT accounts for 5% of the volume on Coinbase. Its price is currently hovering around 99 cents.
Troubled USDT
A review of stablecoins performance following the dramatic FTX collapse shows USDT among the digital assets knocked off their usual peg. In particular, the CoinGecko data indicates USDT suffered a downtrend that plunged its exchange to 93 cents.
The data indicates Tether is yet to recover from the slump, with some pairs still trading at $0.99 at Binance. On the contrary, most pairs have regained their $1 peg.
Coinbase’s campaign to waive conversion fees leverages the period when Tether is encountering a troubled spell. The period began in September when a New York Court judge ordered Tether to furnish financial records confirming USDT backing.
Besides, Tether is battling another lawsuit at the New York Supreme Court to compel the state’s attorney general to release evidential documents obtained during the investigations into USDT reserves.
Stablecoin’s Rivalry
Coinbase’s decision to encroach USDT users is seen as a response to the recent move by Binance to halt supporting USDC. The move by the largest crypto exchange in trading volume shook the stablecoin segment by announcing the conversion of its USDC investments alongside pax dollar (USDP) and trueUSD (TUSD) into Binance USD (BUSD).
Binance’s decision was conceived to erect a huge obstacle to USDC’s efforts to overtake USDT, potentially triggering Friday’s announcement by Coinbase.