On Thursday, the public-traded cryptocurrency exchange Coinbase announced it’s removing conversion fees for its customers to switch their Tether (USDT) holdings to USD Coin (USDC), its co-founded rivalry stablecoin. The news comes in light of the recent cryptocurrency fiasco, which has spurred more doubts about USDT’s safety.

Coinbase Prompts Users to Ditch USDT for USDC

The crypto exchange failed to provide a detailed explanation for the move but mentioned that the recent “events of the past few weeks have put some stablecoins to the test and we’ve seen a flight to safety.”

Coinbase touted USDC as a more reliable and trusted stablecoin. It said the stablecoin is fully backed by cash and short-dated U.S. treasuries held in regulated institutions. And despite Coinbase saying the new development is directed at giving “customers safe, responsible ways to hold and grow their crypto,” some think it’s a ploy to uplift USDC’s market dominance in the ongoing “stablecoin war.”

On September 9, Binance announced it would automatically convert deposits of three USD stablecoins — USDC, USDP, and TUSD — to its affiliated stablecoin, Binance USD (BUSD), issued by Paxos.

Tether Maintains That USDT is Full Backed

Despite the contests, USDT remains the largest stablecoin by market capitalisation and trading volume, per Coinmarketcap data. At the same time, it has also been a subject of criticism and scrutiny on the safety and legitimacy of its reserve. On multiple occasions, however, Tether debunked FUDs, saying that its reserve fully backs USDT tokens in circulation.

More recently, WSJ issued a report warning about the rising loan risk on Tether, which could leave the company with less liquid assets to fulfil redemptions during a crisis. But Tether debunked the report, saying that its “collateral size and quality ensures that Tether backing remains above 100% at any time,” and that its “lending policy is very conservative and the margin call very effective as was demonstrated in the case of Celsius.”

(By Ibiam Wayas)