USDC to Challenge Tether

By Aleksandra Wilson
2 min read October 25, 2021

The company Circle Internet Financial, Inc. has big plans to make USDC challenge Tether, so it earns the title of  the best stablecoin. Jeremy Allaire has stated that he wants USDC to challenge Tether and has big plans to make it happen. The CEO of Circle wrote in a blog post that the company’s mission is to become a federal bank. The projections expect  that USDC, the stablecoin that the site operates, will grow its circulation into potentially hundreds of billions of USD. Currently, stablecoins are having a significant moment because they are pegged to a fiat currency, which makes them more stable, therefore, more trustworthy. 

The Background

New investors all around the world, as well as experienced crypto traders, are embracing stablecoins. They have become a good option since they are considered a better-structured alternative for moving money from one place to another. 

The Plans for USDC to Challenge Tether

Currently, Tether is the one dominating the stablecoin markets. Besides Tether, there are several other options out there, but that only seems to be an opportunity for Allaire. When considering market capitalization, USDC is second to Tether. It’s expected that it will take the lead when the regulators in the United States start scrutinizing the uncommon accounting practices of Tether. So eventually, his plans for USDC to challenge Tether will come down to regulations set in place at the time.

How Stable is this Stablecoin?

The main advantage of stablecoins is that they’re not as volatile as other blockchain currencies. For many companies that mine them, stablecoins offer a fast and easy way of generating revenue. When users pay stablecoins in USD, corporations such as Circle and Tether use that money as a backup for them. For example, Circle stated that USDC operations are expected to generate $40 million this year.

The problem comes when companies decide to place the reserves in commercial paper or bonds. So stablecoins such as USDC end up not being backed up 1 to 1 as companies promise. Such was the case of Circle.

Circle’s Battle 

Circle is planning to go public soon, which means that convincing investors that USDC is safe to invest in is crucial  at this point. The company announced  its intentions to become a federally chartered bank, which could help with the regulation issues they face. However, they are confident that their future is bright.

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