US Financial Firms Prefer USDC to USDT: CryptoQuant Founder

Ki Young Ju, the founder and CEO of on-chain analytics platform CryptoQuant, believes financial institutions in the United States prefer Circle’s USD Coin (USDC) to Tether’s USDT.

In a Friday tweet, Ju revealed that the financial firms are “not too comfortable” with USDT and would rather worldwide crypto users execute their stablecoin transactions in USDC.

U.S. financial institutions are not too comfortable with Tether, and they prefer to see more people using $USDC worldwide.

For $USDC to gain global traction, the fastest way could be for @CoinbaseIntExch to attract more retail investors to their derivative products.

— Ki Young Ju (@ki_young_ju) January 12, 2024

Preferring USDC to USDT

The CryptoQuant founder did not disclose possible reasons why financial firms in the U.S. prefer USDC to USDT but suggested a strategy for getting the desired stablecoin to gain global traction.

Ju explained that USDT’s rising reserve dominance across global exchanges is driven by its use in derivatives collateral. With a market cap of more than $94.9 billion, USDT has gained 71.92% dominance in the stablecoin market, ahead of USDC, which is dominating by 19.49%.

Tether currently dominates the Ethereum and Tron networks. While the former has a balanced composition of USDT and USDC, the latter is overwhelmingly dominated by USDT. This is evident in USDT accounting for over 95% of all token contracts and 94% of stablecoin total value locked on the Tron network.

In 2023, USDT added more than $24 billion to its market cap, while USDC lost close to that. By this time last year, the Tether’s market cap hovered around $66 billion, but by the end of 2023, it had risen to $91 billion.

Giving USDC Global Traction

It is worth noting that the decline in USDC’s market cap worsened after Circle revealed it was exposed to the U.S. banking crisis of March 2023. From a peak of $55 billion in June 2022, the stablecoin’s market cap has fallen to around $25 billion.

Ju said the fastest way to get USDC’s use on a global scale could be the Coinbase International Exchange, attracting more retail investors to its derivative products. The exchange launched a crypto-derivatives trading platform in May for non-U.S. users, and the products offer up to 5x leverage, which are settled in USDC.

Meanwhile, Coinbase appears to be on the task already as it just announced a partnership with Yellow Card, the largest African stablecoin exchange, to give more users access to USDC.