Stablecoin USD Coin (USDC) has grown in popularity since the collapse of FTX and now often reaches four to five times the daily transfer volume recorded by its main competitor Tether (USDT) according to data from blockchain analytics company Glassnode.
But even USDT’s market cap is $23 billion larger than USDC’s. On January 10, the difference was in favor of the USDC by a margin of four and a half times.
Both stablecoins recorded a surge in transfer volumes after Binance CEO Changpeng Zhao’s infamous tweet on November 6th announced that Binance would liquidate all FTX Token (FTT) holdings. FTX then went bankrupt.
Since then, USDC has become the preferred choice for crypto users averaging more than $12.5 billion in transfer volume compared to USDT per day according to Glassnode data.
While each stablecoin is designed to trade as close to one US dollar as possible and is backed by reserves held by the issuer, USDC is considered by some in the crypto community to be a safer option.
Supporters refer to USDC assets, which are backed by short-term US cash or treasuries and audited monthly by global accounting firm Grant Thornton.
Tether has faced criticism over the years for not providing proper audits and lack of transparency regarding reserves.
The company behind USDT was fined $41 million in October 2021 by the Commodity Futures Trading Commission, which was accused of only having sufficient reserves 27.6% of the time between 2016 and 2018 despite claiming the token was fully backed by fiat currency.
Tether has shed the commercial paper backing the token it issued in favor of a more secure alternative, with the latest asset breakdown on November 10 showing that it has nearly $46 billion in reserves including cash, bank deposits and US treasuries.
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USDT briefly lost its peg to the US dollar after FTX fell amid fears of exposure to Alameda Research and FTX, which Tether rejected.
On-chain evidence suggests both companies are trying to accelerate stablecoins.
USDT has recorded a higher transfer volume than USDC until May 2021, after Tether increased its token supply from $8.79 billion to $61.82 billion over the past year, representing a 603% increase.
Despite changes in consumer preferences, Tether cited market capitalization growth as indication of “trust and confidence in the continued market in Tether,” and notes that each token can be redeemed for US dollars on a 1:1 basis.