Financial Institutions in the U.S. Prefer USDC Over USDT
Ki Young Ju, the founder and CEO of on-chain analytics platform CryptoQuant, believes that financial institutions in the United States have a preference for Circle’s USD Coin (USDC) over Tether’s USDT. According to Ju, these institutions are “not too comfortable” with USDT and would rather see global crypto users using USDC for their stablecoin transactions.
Possible Reasons for the Preference
Ju did not provide specific reasons for why U.S. financial firms prefer USDC to USDT. However, he suggested a strategy to help USDC gain global traction.
Rising Dominance of USDT in Derivatives Collateral
USDT has seen its reserve dominance increase across global exchanges due to its use in derivatives collateral. With a market cap of over $94.9 billion, USDT currently holds 71.92% dominance in the stablecoin market, surpassing USDC’s 19.49% dominance.
Tether’s Dominance on Ethereum and Tron Networks
Tether is currently dominant on the Ethereum and Tron networks. While Ethereum has a balanced composition of both USDT and USDC, the Tron network is overwhelmingly dominated by USDT. This is evident in the fact that over 95% of all token contracts and 94% of stablecoin total value locked on the Tron network are represented by USDT.
Market Cap Comparison: USDT vs. USDC
In 2023, USDT experienced significant growth, adding over $24 billion to its market cap, while USDC lost a similar amount. By the end of 2023, Tether’s market cap had risen from around $66 billion to $91 billion.
Gaining Global Traction for USDC
The decline in USDC’s market cap worsened after Circle revealed its exposure to the U.S. banking crisis in March 2023. To achieve global usage of USDC, Ju suggests that Coinbase International Exchange could play a crucial role by attracting more retail investors to its derivative products. Coinbase has already announced a partnership with Yellow Card, the largest African stablecoin exchange, to expand access to USDC for more users.
Hot Take: Financial Institutions Prefer USDC Over USDT
Financial institutions in the United States show a preference for Circle’s USD Coin (USDC) over Tether’s USDT. This preference may be driven by various factors, although specific reasons were not disclosed. However, to gain global traction, it is crucial for USDC to attract more retail investors through platforms like Coinbase International Exchange. With its rising dominance in derivatives collateral and partnerships aimed at expanding access, the future success of USDC seems promising.
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