USDC and USDT are stablecoins pegged to the US dollar (1:1), but there are important differences between them that affect their reliability, transparency, and use.
1. Issuers and regulation
- USDC (USD Coin):
- Issued by Circle in conjunction with Coinbase.
- Regulated in the USA, complies with SEC and other authorities' requirements.
- Transparency: Regular audits and monthly reserve reports.
- USDT (Tether):
- Issued by Tether Limited (linked to the Bitfinex exchange).
- Historically faced regulatory lawsuits (for example, a $41 million fine from the CFTC for false statements about collateral in 2021).
- Audits are conducted less frequently, reports are less detailed.
2. Collateral
- USDC:
- Fully backed by cash dollars and short-term U.S. treasury bonds.
- Reserves are held in reliable banks (for example, BlackRock).
- Share of treasury bonds: ~80%, cash — ~20% (data as of 2024).
- USDT:
- Claimed collateral in the form of cash, commercial paper, cryptocurrencies, and other assets.
- According to Tether (Q1 2024):
- Cash and cash equivalents: ~90% (including treasury bonds).
- Crypto assets: ~5% (for example, Bitcoin).
- In the past, there were scandals due to a lack of transparency.
3. Transparency
- USDC:
- Publishes monthly reports breaking down reserves (confirmed by the auditing firm Grant Thornton).
- Reserves can be verified through the Circle website.
- USDT:
- Reports are published quarterly but without detailing specific assets.
- Auditors (for example, BDO) confirm the total amount of reserves but not the structure.
4. Usage and popularity
- USDT:
- Leader by volume: Market capitalization — $112 billion (2024), market share of stablecoins — ~70%.
- Widely used on exchanges (Binance, OKX) and in countries with unstable economies.
- USDC:
- Market capitalization — $33 billion (2024), market share — ~20%.
- Popular in DeFi (Uniswap, Aave) and among institutional investors due to reliability.
5. Risks
- USDC:
- Dependence on partner banks (for example, temporarily lost linkage in 2023 due to problems with Silicon Valley Bank).
- Lower liquidity on some exchanges.
- USDT:
- Risk of regulatory sanctions (for example, prohibition in the EU or USA).
- Questions about the quality of collateral (for example, low-rated commercial paper).
6. Who is it suitable for?
- USDT:
- Traders who prioritize high liquidity and availability on all exchanges.
- Users in regions with limited access to banking services.
- USDC:
- Investors who value transparency and reliability.
- Participants in the DeFi ecosystem and institutional clients.
Summary
USDT dominates in liquidity, but USDC is considered safer due to transparency and regulatory compliance. The choice depends on your goals:
- For active trading — USDT.
- For long-term operations and DeFi — USDC.