Visa decided to use the USDC stable coin in a hybrid payment system where the user will create a wallet and Visa will send a plastic card to be used with USDC tokens.
I don't know if this is the actual plan of Visa, but this is how I am reading the concept. Cryptocurrencies are supposed to be P2P as methodology and any third party was usually unwanted. The exclussion of third party is one of the reasons cryptocurrencies gained acceptance and were recognized as an interesting technology that was disrupting finances.
In fact I don't know if USDC servers something. It certainly doesn't serve my interests. If I wanted to hold a stable coin pegged to the dollar, I wouldn't need to hold USDC but USD instead.
USDC has now reached 10Billion dollars in market share. It is the second stablecoin in market cap, with Tether the first one having more than forty billion dollars market cap.
While USDT and USDC is just stable coins for most of us, there is one underlying difference. Tether or USDT which is under the same management as Bitfinex has attracted attention for all the negative reasons.
The controversial issuance and minting of USDT in large quantity was always coinciding with instant support for the price of BTC
There was an 750 million loan from Tether to parent company Bitfinex which became subject to investigation by New York authorities
There is still controversy over the backing of USDT by USD. Initially it was claimed by Tether that each USDT was backed by USD on 1:1 basis, however this was changed later
The fact that Tether was never audited and nodoby knows balances in the company accounts. Also there is no public announcement on which assets is Tether using to back the USDT
The fact that wire transfers can't be processed in weekends, yet Tether is minted nevertheless on weekends.
USDC is a stable coin running on the Ethereum blockchain and it is developed by Coinbase and Circle which is the issuer. Circle is holding USD in bank accounts backing USDC on 1:1 basis, while it operates within the US laws for money transmition. The issuers are regulated financial institutions and the assets are backed by reserves and the process is oversighted. It is looking that USDC is following order, unlike USDT.
While USDC is looking like a fair and safe bet, Tether on the other hand looks like a ticking bomb, one that could create big problems for BTC and a big part of the cryptocurrency market.
In top financial meetings all over the world, stable coins have been discussed, however Tether wasn't ever mentioned. It is not considered to be a valid stable coin and it is possible that regulators will not allow it to continue after a while. Tether has a target of 100 Billion USDT for 2021. This was announced by Paolo Ardoino in an interview in early 2020. The reasons it is issued and used are also not very clear, as there are reports for loans in hundreds of millions of dollars, without backing in Chinese financial entities that are just products betting long on Bitcoin.
Since there is no regulatory clarity and possibly Tether has no actual backing for 100% of the USDT, not by US Dollar or any other asset, it is very possible that Tether will collapse once this becomes clear. The previous time Tether was pushed to report and audit its reserves, it failed to do so, and announced that an audit was not required.
This time it is 40Billion dollars and probably the damage will be done at 100B. Maybe this event will coincide with the end of the bull run of the third Bitcoin halving. The possible dates of Bitcoin reaching the top and Tether having minted 100Billion USDT seem not to be too far. So the next bear mark may begin with the Tether scam collapsing.
Share comments on this, it is some thoughts that may or may not come true. The two previous bull runs ended with all the blame being put on MtGox. MtGox may still be a reason for the bull run to end, with the final 140,000 BTC being given to the account owners that will certainly be liquidated at these prices. But I really think that Tether is not just a ticking bomb, but it will be a nuclear accident when it blows.
I just found out that auditing is not required for tether.