USDT vs USDC: what is the difference?

USDT and USDC are both stablecoins designed to be worth one US dollar. The difference is who issues them, what backs them and how that backing is reported. USDT, issued by Tether, is the larger of the two. USDC is issued by the US company Circle.

Side by side

The coin guides for each give the current figures.

What backs each one

Tether reports its reserves every quarter. The report is an attestation, which is a snapshot on one date and not a full audit. Its reserves include gold and bitcoin as well as US government debt.

Circle keeps most of USDC's reserve in a government money market fund managed by BlackRock, and the rest as cash at large banks. It publishes the holdings every week.

What has gone wrong before

• USDT. In October 2021 a US regulator, the CFTC, fined Tether $41 million. It found that Tether had held enough reserves to back its tokens on only 27.6% of the days in a sample from 2016 to 2018, while claiming to be fully backed.
• USDC. In March 2023 Circle had $3.3 billion of reserves at Silicon Valley Bank when the bank failed. USDC traded as low as 86 cents that weekend, then returned to one dollar after US authorities protected the bank's depositors.

What they share

• Neither is a bank account. There is no deposit insurance on the token.
• Most holders cannot redeem with the issuer. They sell on an exchange at the market price.
• Both exist on many blockchains. The version on one network is a separate token from the version on another, and sending it over the wrong network can lose it. Lesson 33 explains.