Coinbase Offers No-Fee Conversion of USDT to USDC

Coinbase is offering to convert USDT to USDC with no fees. 

The firm said in a Thursday (Dec. 8) blog post that the recent turmoil in the cryptocurrency markets had seen a “flight to safety,” even from fiat-backed stablecoins, which are cryptocurrencies pegged to reserve assets like the U.S. dollar. 

“We believe that USD Coin (USDC) is a trusted and reputable stablecoin, so we’re making it more frictionless to switch: starting today we’re waiving fees for global retail customers to convert USDT to USDC,” Coinbase said in the post. 

Coinbase said in the post that it co-founded USDC in 2018, that the coin is 100% backed by cash and short-dated U.S. treasuries and is always redeemable for 1:1 for U.S. dollars. 

The firm added that USDC delivers transparency through monthly attestations from audit, tax and advisory firm Grant Thornton LLP. 

“At Coinbase, we’re focused on stability and trust,” the post said. “Today’s announcement represents one step on that journey — enabling global customers to convert USDT to USDC with no fees. We’ll keep working to give our customers safe, responsible ways to hold and grow their crypto.” 

As PYMNTS reported on Dec. 1, USDT, also known as Tether, is one of the most popular stablecoins pegged to the U.S. dollar, with its $65 billion market value at the time making it the third largest cryptocurrency behind Bitcoin and Ethereum. 

Reached for comment, Tether said the Coinbase offering is “wildly inappropriate” and demonstrates Coinbase’s “desperation” at a time when its market cap has lost $12 billion in the past three months.

“This isn’t an honest competitive rivalry,” Tether said in the statement. “This is a sad and desperate attempt from a company that is clearly suffering. The general conclusion on Twitter in response to their announcement is that this is a move borne out of desperation.”

As PYMNTS reported at the time, if Tether has been increasingly lending its own coins and not selling them instead for equivalent fiat, this adds to the risk that the company may not have enough liquid assets to weather a large redemption event.