Future of Fintech
USDT vs USDC: Which stablecoin should you use?
USDC and USDT are currently the world’s leading stablecoins, with a combined share of more than 80% of the stablecoin market.Tied to the US Dollar, both USD Coin (USDC) and Tether (USDT) have emerged as the leading stablecoins, consistently leading the market and appearing in nearly every major cryptocurrency exchange, wallet, and application.
Since traditional finance hasn’t found a solution to real-time and compliant cross-border payments yet, more money service businesses (MSBs) are turning to using stablecoins in such transactions every passing day. However, most of them are conducted off-the-books, relying on the trust each party has for the other. This raises legitimate security concerns for not only MSBs on both ends but also for the health of the global finance industry.
If you’re considering which stablecoin is a better fit for your needs, it helps to understand how each one functions. Learn more here about the differences between USDC and USDT.
Both USDT and USDC are popular stablecoins, and both are pegged to the USD. However, that's where their similarities end. USDT is the most traded cryptocurrency and is slightly more widely available than USDC, while USDC has a lower trading volume, but is perceived to be a safer store of value since it's backed by cash and cash equivalents. We've put together a table with the key traits of both:
USDT Stability
Based on historical data, the USDT token price generally holds steady at US$1. While there are slight dips and highs, the market quickly corrects itself to return to the US$1 pegged value.
USDT Volume
The trade volume for USDT is a testament to the stablecoin’s popularity. As of this time of writing, the 24h trade volume of USDT clocks in at almost $36 billion — a significantly higher amount than the second-place currency (ETH at $21.3 billion). Meanwhile, USDT’s market capitalisation is still steadily increasing in spite of the competition, with a current value of $78 billion.
USDC Stability
Like USDT, the USDC coin price remains stable at around US$1. While there have been dips and highs, these are quickly corrected, returning the value of USDC back to US$1.
USDC Volume
USDC ranks eighth according to market capitalisation, and it’s on the rise, albeit with a lower value of $50.9 billion. However, the 24h trade volume for USDC remains significantly lower than USDT at only $2.7 billion versus the latter’s almost $36 billion.
Regulations Around Stablecoins in the U.S.
In November 2021, the Biden Administration’s Working Group on Financial Markets (PWG), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) released the PWG Report calling for legislation to limit the issuance of stablecoins to insured depository institutions to allow serious regulation of stablecoins to address the systemic risk they may pose to the economy and financial system.
This is indicative of congress taking action to bring stablecoins into the traditional financial system, by enforcing audits and other regulatory measures to ensure transparency and protection of users. We're seeing signs of this as well, as stablecoin issuers are starting to provide regularly audited reports of reserves to ensure the USD reserves held are equal to the supply of stablecoins at a constant rate of 1:1.
Get Started Investing in Stablecoins
Diversifying your investments to include stablecoins is a great way for investors with moderate risk appetites to profit from crypto market growth, without the volatility risks associated with typical cryptocurrencies. Stablecoins like USDT and USDC constantly maintain their value at US$1, as opposed to the more drastic gains and losses of cryptocurrencies like bitcoin and Ether.
USDC vs USDT: Final thoughts
USDC and USDT are but two of many stablecoins offered in the crypto ecosystem today.
While USDT is the most heavily traded, its parent company Tether has been reluctant to comply with audits and investigations, and has skirted somewhat around the issue of inevitable regulation. Although you can earn high returns on your USDT investment, there has long been some uncertainty surrounding Tether’s backing of the coin.
USDC, on the other hand, has been diligent in planning ahead for potential government oversight into stablecoins. You can still buy and lend your USD Coin for a comfortable gain, while knowing your downside is mitigated through the Centre Consortium’s compliance and monthly audits.
By leveraging reliable stablecoins, iPeakoin enables MSBs to achieve fully compliant and real-time fiat-to-fiat cross-border payments. We support not only currency transactions between USD and BTC, ETH, USDC, and USDT, but also coins trading.
If you have any questions or feedback, or just want to say hi, send us a note at marketing@ipeakoin.com. We always love to chat.
As a neobank, iPeakoin builds a new generation of banking for all businesses to operate without borders and restrictions. We aim to create social value, serve the public good and drive sustainable growth for our customers.