- Payments giant Visa has announced that its network will utilize USDC to settle transactions.
- Since the announcement, the trading volume of USDC has risen by 46%, indicating a positive run in the near future.
- USDC is a stablecoin pegged to the US dollar. It poses direct competition to USDT, which has gained popularity in China.
- The announcement by Visa is a step in the right direction as we increasingly advance toward the merging of traditional and crypto-based payments systems.
That makes Visa the pioneering payment network utilizing dollar-backed stablecoins to settle transactions. Following the announcement, market activity on USDC reached a fever pitch, with trading volume up by 46% in the following 24 hours.
Visa Embraces USDC
On Monday, 29th March, Visa announced that it will utilize USDC stablecoin to settle cryptocurrency-based transactions. The move will serve as an “upgrade to Visa’s settlement capabilities” and act as a bridge between “digital and traditional fiat currencies,” according to Cuy Sheffield, Head of Crypto at Visa.
The move is in partnership with the Crypto.com platform, with the prototype built on the Ethereum blockchain. Crypto.com will be able to transfer USDC to Visa to settle some of its liabilities from the Crypto.com and Visa collaboration.
The rise of stablecoins was too appealing for Visa to ignore. At the moment, there are roughly 10 billion USDCs in circulation, prompting Visa to invest heavily in upgrading its infrastructure to incorporate USDCs in its arsenal.
On the Flipside
- Although not major targets of cybercriminals, stablecoins have had their fair share of hacks.
- In October 2020, stablecoins USDC and USDT were the focus of cyber theft.
- In total, hackers made away with $13 million worth of USD Coin (USDC) and $11 million worth of Tether (USDT).
- The hackers stole the stablecoins from the decentralized finance (DeFi) service Harvest Finance.
USDC Poised To Go Head-to-Head With USDT
In the last few months, USDC stablecoin has experienced growth spurts that have resulted in an impressive market capitalization of $10.7 billion, making it the 12th largest cryptocurrency.
Established in 2018, USDC is pegged to the US dollar at a 1:1 ratio, meaning every USDC in circulation is backed by $1, held in reserves consisting of both cash and US Treasury bonds.
The recent gain by USDC sets it on course to go head-to-head with its direct competition, Tether (USDT). At the moment, Tether is the largest stablecoin in the world with a market capitalization of over $40 billion, clear of USDC by a whole $30 billion.
USDT is also backed against the dollar at a ratio of 1:1 and has gained a massive following in China. A report by Chainalysis noted that “for Chinese exchange users, Tether has replaced the yuan as the go-to fiat currency.”
Despite the massive adoption of USDT in China, USDC is also putting up a great challenge for a piece of the market share, and the announcement by Visa places it on a perfect pedestal for a big push forward.