Coinbase Targets USDT Stablecoin Rival Tether With an$ 86 Billion &#039, Stretch Goal&#039, for USDC

The crypto-heavyweight is removing its gloves for a new battle in the cryptocurrency ring, according to Coinbase CEO Brian Armstrong on Thursday.

During the bank’s fourth-quarter earnings contact, Armstrong said the company will aim to issue Tether’s place as the industry’s reigning crypto issuer. The final goal is to make Circle’s USDC the country’s “number one dollar stablecoin”.

This innovative objective, according to Armstrong, is a” stretch goal,” indicating that it is an ambitious yet doable achievement that will drive Coinbase outside its comfort zone.

As the second largest cryptocurrency, USDC’s market cover stands at$ 56 billion after hitting an all-time high next year. That leaves a lot of ground for USDC to support as it attempts to surpass Tether. As of this writing, USDT currently accounts for a hulking 60 % of the cryptocurrency business at$ 142 billion market capitalization, per CoinGecko.

Because bitcoins are designed to keep a 1: 1 clamp with another money, in this case the U. S. buck, the market valuation tends to be a reliable indication of issuance.

Coinbase CFO Alesia Haas contextualized Armstrong’s striking phone on Thursday. She said,” I think it’s important to note that we hope to accomplish this over the next few times.”

The high bar for Coinbase comes after its stronger-than-expected fourth quarter was marked by$ 1.3 billion in profits. However, cryptocurrency legislation appears to be gaining speed on Capitol Hill, after decades of quibbling among politicians.’

Sen. Tim Scott (R-SC), Senate Banking Committee Chairman, has already pledged that legislation covering cryptocurrencies will get passed within the first 100 times of President Donald Trump’s term.

That act, dubbed the GENIUS Act, may create a route to propriety for manufacturers of U. S. dollar-backed stablecoins. According to a review of the costs that saw, that would include sharing regular audits on the state of the fiat resources backing their products.

How sweeping crypto regulations might eventually affect USDC, USDT, or any other bitcoin remains to be seen because lawmakers may end up changing the cryptocurrency bill before it can pass through both chambers of Congress and been signed into law by Trump.

Is legislation help?

Days before Coinbase’s income, JP Morgan researchers posited that Tether may be forced to change the composition of the dollar-equivalent resources backing USDT.

In its most recent attestation report, Tether said those reserves consist mostly of cash and cash equivalents and other short-term deposits, including assets like U. S. Treasuries and money market funds, which account for 82 % of Tether’s reserves.

Wire has been releasing verification reports about the reserves that support its stablecoin for years, occasionally and then more frequently. However, neither of those financial claims have been audited, as accountants and companies have been quick to point out.

By gathering data, assessments aim to identify risks and possible compliance issues, but attestations are generally used to demonstrate how accurate the data is. &nbsp,

However, it is important to point out that Circle hasn’t yet released an investigated report on the resources supporting USDC. Like Tether, the company publishes certifications about the “highly wet fiat resources” backing USDC and EUROC, its Euro-backed equal.

JP Morgan posited that Tether may have to sell a significant sum of “non-compliant” assets in its reserve, like Bitcoin and any remaining commercial paper, if it wants to comply with new U.S. rules.

A Tether spokesperson pushed back against JP Morgan’s suggestion, telling that$ 20 billion in “other very liquid assets” had been overlooked by the Wall Street titan, along with “more than$ 1.2 billion in profits per quarter” from holding swathes of government debt.

Importantly, Tether may drop outside the purview of the cryptocurrency bill due to the company’s recent move from the British Virgin Islands to El Salvador.

I believe that if stablecoin regulation is implemented in the United States, USDC did disproportionately gain market share, according to Juan Leon, a top investment strategist at Bitwise. But will that be sufficient to exceed USDT?

For a chance to surpass USDT, USDC would have to be the most popular cryptocurrency in developed markets, according to Leon. USDC is less likely to be able to remove USDT’s hegemony in emerging markets, he added.

Gary Gensler, a former SEC chair, when referred to cryptocurrencies as “poker cards” used in decentralized finance ( DeFi), a popular way for traders to quickly area funds and plug in profits. The use of bitcoins in money laundering and sanctions avoidance has also drawn discussion, with both remittances and payments illustrating real-world apply cases.

‘Accelerating’

Stablecoin-related on-chain activity is primarily concentrated on sites that help bright contracts, like Ethereum and Solana. But Armstrong said growing USDC’s footprints on the Ethereum scaling system Base—which Coinbase itself created and launched—is code, along with developing business partnerships.

” We think USDC has a network effect behind it, and the compliant approach that they’ve taken, I think, is going to be really defensible long term”, Armstrong said, referring to Circle.

” We’ll be accelerating the market cap growth of USDC with more partnerships, and leaning into new use cases like adding payments support across our product suite”, he continued.

Stablecoin revenue totaled$ 224 million in Coinbase’s fourth quarter, falling$ 20 million from the previous quarter and representing just 9.4 % of the company’s total sales.

In its shareholder letter, Coinbase described USDC as” the fastest growing’ major’ stablecoin in 2024″, while pointing to$ 12 billion in on-chain USDC payments that the exchange facilitated.

Coinbase is currently taking an offensive stance in growing USDC. However, the company saw stablecoin revenue increase its subscriptions and services segment during the bear market in 2023, when trading volumes decreased.

In fact, subscriptions and services revenue temporarily surpassed transaction revenue as Coinbase’s main money maker, totaling$ 334 million and$ 289 million, respectively, in the third quarter of 2023.

Circle reported that Coinbase had taken an equity stake in the business in August of that year. Both companies agreed to shelve a” self-governance consortium” to better hone their alignment.

contacted Circle and Tether for comment requests, but they did not respond right away.