Brian Armstrong has made a bold claim: he wants USDC to surpass USDT as the world’s top stablecoin. With an $86 billion "stretch goal" in mind, Coinbase is prepping itself for a prolonged battle against Tether’s dominance. But how realistic is this ambition, and what challenges stand in the way?
Coinbase’s Strategy for USDC Growth
Coinbase has been vocal about expanding USDC’s presence in the stablecoin market. This is what they are and will be doing.
Coinbase is integrating USDC into its products and its Ethereum Layer-2 network, Base, aiming for wider adoption (and more network effect)
Armstrong believes that USDC’s "compliant approach" will give it a long-term edge over USDT, particularly in developed markets. Regulation sells
Coinbase is ramping up partnerships to increase the utility of USDC, especially in payments and remittances
USDT Is More Than Just a Stablecoin
Paolo Ardoino has built a financial empire with deep liquidity. There are many competitive advantages that they have based on what they built.
Tether generates over $1.2 billion in profits per quarter from its investments in U.S. Treasuries and other assets. They are liquid in more ways than one
USDT is the stablecoin of choice in regions with weak banking infrastructure, where users prioritize liquidity and accessibility over strict regulatory oversight. Having a dominant presence in emerging markets might be a bigger edge than Brian can fathom
Tether continuously expands its ecosystem, investing in everything from Bitcoin mining to payment solutions
The Role of Regulation
With stablecoin legislation gaining traction in the U.S., some analysts believe regulatory clarity could help USDC gain ground. If Tether is forced to alter its reserve structure or comply with stricter U.S. laws, it could lose some of its market dominance.
However, Tether has been resilient in navigating regulatory scrutiny, even relocating to El Salvador to maintain operational flexibility. Meanwhile, USDC has its own transparency concerns, as Circle has yet to publish a full audit of its reserves, just like Tether.
Can Coinbase’s "Stretch Goal" Become Reality?
For USDC to surpass USDT, it would need to dominate developed markets and significantly cut into Tether’s hold on emerging economies. Coinbase’s compliance-first approach may appeal to regulators and institutions, but I can confidently say that they will never dethrone Tether’s well-established market position.
Brian would need to care more about users than shareholders for that to become a reality.
I love stablecoins, Tether in particular, and I will be writing about the ongoing and ever-increasing future stablecoin war. Stay tuned for insights, drama, and analysis as it all unfolds.
P.S. In case you didn’t realize, I am not Patrick Hansen