The Game of Stablecoins: USD Coin (USDC) vs Tether (USDT)

The Game of Stablecoins: USD Coin (USDC) vs Tether (USDT)

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Circle company, the issuer of the second cryptocurrency in terms of capitalization, may become America’s first national digital bank.

Circle has filed an application with the US Securities and Exchange Commission (SEC) for a merger with the publicly traded Concord Acquisition Corp. Thus, it can become the second public cryptocurrency company. The first was the largest cryptocurrency exchange Coinbase, which was directly listed on the NASDAQ. Experts called this case unsuccessful, Coinbase shares are not rising.

Kraken, the second-largest US crypto exchange, also announced its intention to become a public company. Moreover, Kraken noted that it is considering the possibility of an IPO instead of a direct listing. Circle chose the third path.

Circle CEO Jeremy Allaire said in a blog post that the merger is in line with the requirements of the Federal Reserve, which serves as the Central Bank of the United States, and other regulatory and supervisory bodies such as the Treasury, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). This gives hope that the company’s ambitious plans will be realized. Jeremy Aller stated:

– Building on our long-standing commitment to trust, transparency, and accountability in the dollar-denominated reserves backing USDC, we are setting out to become a U.S. Federally-chartered national commercial bank.

USDС is in eighth place in terms of capitalization, lower than XRP, Cardano (ADA), and Dogecoin (DOGE), according to Coinmarketcap. It is very likely that DOGE will leave the scene in the near future, as it is a purely speculative asset. XRP is still in a precarious position due to the SEC lawsuit. Cardano (ADA) is also unlikely to grow strongly, ADA growth is organic and therefore moderate.

Given that the capitalization of stablecoins does not grow depending on cryptocurrency quotes, USDC can rise up and surpass its direct competitor Tether (USDT) only through additional investments. This is why a merger with a public company is made.

Currently, the capitalization of USDC exceeds $28 billion, the capitalization of USDT is more than $65.5 billion. Recently, Tether announced that it had passed an audit, the auditor Moore Cayman recognized the assets to back USDT. Tether (USDT) has been the long-term leader among stablecoins.

Stablecoins are mainly used to ride out the period of uncertainty and turbulence in the cryptocurrency market. Issuers of stablecoins make money on commissions, not on price increases. Therefore, the larger the user base, the greater the income of the issuing company. CEO Circle states:

– In the coming years, we anticipate that USDC will grow into hundreds of billions of dollars in circulation, continue to support trillions of dollars in low-friction, high-trust economic activity, and become widely used in financial services and internet commerce applications.

The authorities of different countries make conflicting statements about stablecoins. Some see them as a threat to the currency market. Others see stablecoins as the backbone of the digital financial system of the future. Circle is trying to implement this idea in the United States and become an example for other countries.