USDT or USDC? Key considerations when choosing a stablecoin

Stablecoins like USDT and USDC are shining stars of digital finance. Their stability is due to their 1:1 peg to the US dollar. As a result, their use for everyday transactions and overall acceptance are increasing quickly worldwide. In Singapore, for example, the stablecoin payment value reached $1 billion in the second quarter of the year.

But one thing leaves people a little confused: USDT or USDC? They indeed share the same purpose and seem very equal, but they are, in fact, quite different. So, let’s delve into it.

USDT and USDC: What Are the Key Differences?

Transparency is where I believe USDC stands out. It has earned a reputation for its thorough measures to maintain this quality. Circle, the issuer of USDC, provides monthly attestation reports conducted by independent accounting firms. This strengthens user trust and regulatory acceptance. In contrast, the transparency practices of Tether, the issuer of USDT, have been a point of contention, even though there is no evidence to support such sentiments. Tether asserts that each USDT token, just like USDC, is backed by reserves equal to its supply and now offers quarterly reports to improve transparency. 

When it comes to regulatory compliance, I believe USDC is again ‘winning,’ especially for institutions and within traditional financial systems. Circle stores its reserves in regulated US financial institutions and sticks to strict Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines. Tether’s regulatory journey has been, unfortunately, more complex. And again, while they implemented compliance improvements, people find Tether’s regulatory approach not yet very transparent, but, as was said earlier, there is no proven evidence to accuse them of violating the AML guidelines. Moreover, they have already strongly denied these allegations, and most importantly, they have a strong record of working closely with law enforcement.

However, USDT has a big advantage in its high liquidity and extensive adoption. USDT has been around since 2014, so it is deeply ingrained in the crypto ecosystem. USDT is available on almost every exchange and frequently used in trading pairs, which makes it highly liquid and easy to access for most traders. It is the most traded stablecoin by volume due to these factors. Interestingly, its widespread adoption is highly connected with USDC’s decision to exit TRON, largely perceived as related to AML risks. This prompted USDC’s users seeking low-cost…