USDT vs USDC: Making the Right Choice for Stability and Liquidity

Comparing USDT vs USDC: Which Stablecoin Suits Your Needs?

Blockchain-based payments can offer businesses a faster and more cost-efficient way to move money. While some remain cautious about cryptocurrencies, their advantages are hard to ignore: minimal transfer fees, instant global settlement, stable pricing, and growing institutional adoption. Even a consortium of major U.S. banks has reportedly explored the idea of jointly issuing stablecoins, underscoring the growing interest in bringing digital assets into the mainstream financial system.

Not all cryptocurrencies, however, are suited for business payments. Popular assets like Bitcoin and Ethereum fluctuate in price, often gaining or losing value like a growth stock rather than a currency. And, some less-popular alternatives may lack broad accessibility to multiple blockchain networks or fail to meet regulatory requirements for B2B payments.

Stablecoins have emerged as the leading blockchain alternative for predictable, currency-based payments. These tokens are pegged to fiat currencies or commodities, which keeps their value stable and practical for everyday business use. In this guide, we’ll compare the two most widely used USD-pegged stablecoins—USDC and USDT—highlighting their benefits and explaining how they can fit into your business needs.

Both are available through the Slash Financial dashboard, an all-in-one business banking platform designed for seamless blockchain payments.¹﹐⁴ With Slash, you can securely hold USDC, USDT, or Slash’s own USD-pegged coin, USDSL, and easily convert between crypto and cash using built-in on/off ramps. Non-U.S. entities can also open a Global USD Account, a crypto-enabled business wallet built for international operations that doesn’t require an LLC.

What are stablecoins?

Stablecoins are digital tokens built on blockchain technology that are pegged to another currency or commodity to maintain a stable value. Unlike cryptocurrencies such as Bitcoin or Ethereum, which can experience significant price swings, stablecoins are designed to hold a consistent store of value. This makes them especially useful for B2B transactions, as a stable asset in crypto portfolios, or as cash equivalents for the U.S. dollar.

Stablecoins maintain their value primarily through reserves held by their issuers Each token in circulation is backed by an equivalent amount of assets (such as U.S. dollars, treasury bills, or other securities) that support its peg to $1. Minting occurs when new stablecoins are added to the blockchain; to issue $1000 of USDC, for instance, their issuer will place $1000 into their reserves as a collateral store of value. Burning, on the other hand, happens when coins are redeemed and removed from circulation.

The market capitalization of a stablecoin reflects the total value of tokens in circulation, similar to a company’s outstanding shares. For example, a stablecoin with a $100 billion market cap should have roughly $100 billion in reserves. Many investors and businesses use leading cryptocurrency exchanges such as Coinbase and Binance to view stablecoin prices, trading volumes, and market performance in real time.

Different stablecoins use different structures to maintain their value. Here are the four most common approaches:

• Fiat-backed: Stablecoins that are pegged to currencies held in reserve, such as U.S. dollars. For every token issued, an equivalent amount of fiat currency should be held in bank accounts or other liquid assets. This is the most common and straightforward approach.
• Commodity-backed: Derive their value from physical assets like gold, silver, or real estate. These tokens represent ownership of a specific quantity of the underlying commodity.
• Crypto-backed: Stablecoins that are collateralized by other cryptocurrencies. Because crypto assets are volatile, these stablecoins typically are over-collateralized, meaning that the total value of crypto backing the stablecoin exceeds the stablecoin's market cap value.
• Algorithmic: Use smart contracts and algorithms to control supply and demand, automatically minting new tokens when prices rise above the pegged value and burning tokens when prices fall below it.

In this article, we’ll be discussing two popular stablecoins, USDC and USDT, which are pegged to the US dollar and backed by U.S.-denominated securities. However, the coins differ in their exact reserve holdings, regulatory measures, and exposure to price volatility, reflecting the differences in how each coin’s issuer has carved out its niche in the cryptocurrency marketplace.

What is USDT?

USDT (USD Tether) is currently the largest stablecoin by market cap, valued at approximately $183.9 billion. It’s among the most widely traded digital assets on exchanges like Coinbase and Binance. Operating across more than 50 blockchain networks, USDT is effectively the default dollar of the crypto markets—it’s always available, instantly tradable, and widely trusted as an asset.

USDT's price can occasionally move slightly above or below its $1 peg, particularly during periods of high market activity. These fluctuations are typically brief, and the coin generally maintains close proximity to its dollar peg. Price stability has improved over time as the coin’s issuer, Tether, has strengthened its operational practices. As of 2025, Tether publishes independent quarterly assurance reports verified by BDO Italia. These reports detail reserves that include U.S. Treasury bills, money market funds, and other cash equivalent assets that back USDT.

What is USDC?

USDC (USD Coin) is issued by Circle, a U.S.-based financial technology company, and is the second-largest stablecoin with a market capitalization of approximately $74.9 billion. It operates across more than 70 blockchains (including Slash, Avalanche, Solana, and Ethereum) making it even more accessible than USDT.

USDC operates under stricter U.S. regulatory oversight and maintains strong adherence to traditional financial regulations. Its price stability has been exceptional; according to Yahoo Finance, USDC has remained within ±$0.01 of its $1 peg since 2023. Circle continues to strengthen USDC’s credibility by implementing compliance measures that align with MiCA and KYC requirements, making it more compatible with the standards of regulated payment networks.

USDC is fully backed by U.S. dollars and short-term U.S. Treasury bonds held in regulated financial institutions. Circle provides monthly attestations from independent accounting firms, verifying that each coin in circulation is backed 1:1 by liquid assets. Circle’s emphasis on transparency and regulatory oversight could make USDC a preferred option for institutional investors and organizations operating in highly regulated industries.

6 key differences between USDC and USDT

Although both USDC and USDT are both designed to maintain parity with the U.S. dollar, their differences reflect the regulatory environments and oversight standards of their issuers.

Tether, headquartered in El Salvador, operates under the country’s Digital Assets Issuance Law, which offers greater flexibility in how reserves are managed and disclosed. This framework allows Tether to hold a diverse mix of assets (including U.S. treasuries, gold, and Bitcoin) and rely on independent audits rather than continuous government supervision. For holders, this structure supports broader global access and faster issuance, though it comes with fewer regulatory safeguards than those found under US or EU financial law.

Circle, the issuer of USDC, operates under U.S. financial regulations that require stricter reserve management, transparency, and reporting standards. Its reserves are held in regulated financial institutions and verified through monthly independent attestations. This stronger compliance foundation gives USDC advantages in highly regulated international networks and can simplify cross-border transactions in jurisdictions that recognize U.S. financial oversight.

Below is additional information about each stablecoin’s functionality and limitations:

Reserve composition and backing model

USDC holds its reserves entirely in cash and short-term U.S. Treasuries. This structure prioritizes liquidity, transparency, and regulatory oversight; though, it also ties USDC’s stability to U.S. securities markets. USDT, by contrast, is backed by a broader mix of assets, including U.S. Treasury bills, money market funds, precious metals, Bitcoin, and more. This diversified backing model is less dependent on U.S. securities markets, but it can cause value fluctuations during Bitcoin runs or shifts in other non-cash holdings.

Transparency and audit practices

Of the two stablecoins, USDC is the only one that is compliant under the European Union’s Markets in Crypto-Assets Regulation (MiCA). This framework requires crypto issuers to register with national regulators, adhere to business conduct and governance standards, and protect client assets to prevent conflicts of interest. MiCA compliance ensures that USDC follows strict transparency and reporting standards, including the monthly release of detailed, independently verified audits.

Network adoption and blockchain support

While both stablecoins are broadly popular, USDT remains the dominant player by volume. Its weekly trading volume regularly exceeds $1 trillion, supported by a circulating supply of roughly $184 billion. By comparison, USDC records around $123 billion in seven-day trading volume with a circulating supply near $75 billion. However, USDC currently operates on more blockchain networks, offering greater flexibility and integration potential. According to Coinbase, USDT is available on 54 blockchains, whereas USDC operates across 72.

Peg stability and risk profile

USDC has historically been the more stable of the two, rarely fluctuating more than a cent from its $1 peg throughout most of its existence. However, its exposure to the U.S. securities and banking system became evident in 2023, when the Silicon Valley Bank collapse caused USDC to temporarily depeg to around $0.90 before quickly recovering. USDT, by contrast, has shown greater price volatility over time but continues to improve in stability. Between 2018 and 2020, it experienced swings of more than 15 cents during periods of intense Bitcoin market turbulence, though deviations have since become much less frequent.

Use-case focus

USDT and USDC frequently serve as trading pairs, meaning traders often exchange one for the other to manage risk during volatile market conditions. For instance, when USDC temporarily lost its peg during the Silicon Valley Bank collapse, USDT’s price briefly rose above $1 as traders shifted capital between the two. Beyond trading, each stablecoin has distinct use-case advantages. Because USDT is not MiCA-compliant, it has access to decentralized exchanges (DEXs) and can be used in derivatives trading. USDC is favored in regulated environments, particularly for B2B payments, payroll, and treasury management.

Redemption terms and accessibility

USDC offers direct 1:1 redemptions for U.S. dollars through Circle’s platform, available to both businesses and individuals who meet KYC requirements. USDT, by contrast, limits redemptions to verified institutional clients, which can reduce liquidity for smaller holders during periods of high demand. With Slash, built-in stablecoin on/off ramps make it easy to convert between cash and stablecoins directly within your dashboard, simplifying how businesses send, receive, and manage cryptocurrency payments.

Overview: USDT vs USDC

Choosing the right stablecoin for your needs

When it comes to choosing between USDT and USDC, it’s not an either-or decision. Many financial platforms, like Slash, allow you to hold and transact with both, helping reduce exposure to short-term volatility if one coin temporarily depegs. In practice, the better choice depends on how you plan to use the stablecoin—particularly for payments, transfers, or trading activities. Here are a few factors to consider before deciding which coin to send:

Risk management and transparency

If your business makes highly regulated B2B transactions, it may be best to prioritize holding and sending USDC. Each month, Circle issues detailed, independently verified attestation reports about its reserves. It also can be a better cross-border payment option due to its compliance with MiCA and Know Your Customer (KYC) regulations.

Use-case alignment

USDT can be a strong choice for active trading and peer-to-peer (P2P) payments due to its longer market history and wider global adoption. Its non-MiCA status also allows access to decentralized exchanges (DEXs) and derivatives markets. USDC, meanwhile, is gaining traction—particularly in the U.S. and for international B2B transactions. It can be used for business payments such as supplier invoices, payroll, and treasury management.

Geographic & regulatory context

Both stablecoins enable international payments without the foreign exchange (FX) or conversion fees typical of traditional banking systems. However, USDC is usually the preferred option for B2B or cross-border settlements due to its stronger regulatory compliance and MiCA/KYC measures.

Accessible integrations with financial platforms

Some modern business banking platforms, such as Slash, allow users to hold and send stablecoin payments using blockchain networks that support decentralized finance (DeFi) infrastructure. With built-in stablecoin on/off ramps, you can convert USDC and USDT into US dollars seamlessly with funds from your Slash account.

Take control of your crypto payments with Slash

As cryptocurrencies and stablecoins become increasingly integrated into everyday business operations, it’s essential to have early access to blockchain-powered financial tools through a modern business banking solution like Slash.

Slash fully supports on/off ramps for USDC and USDT, allowing businesses to send global USD payments instantly and convert receivables into cash with ease. It also offers an additional hedge against market volatility through USDSL, Slash’s own USD-pegged stablecoin backed by U.S. Treasury bills and USDC. Portfolio holdings are updated every few days to ensure full transparency—learn more about USDSL and Slash’s reserve backing here.

For non-U.S. entities, the Slash Global USD Account provides the ability to send and receive payments in US dollars without foreign exchange fees or conversion costs. It doesn’t require a U.S.-registered LLC to qualify, making it simple for international businesses to access reliable, dollar-based banking on the blockchain.

Stablecoins are shaping the future of business payments—and with Slash, you can be part of it today. Send and receive stablecoins from one secure platform and move money at blockchain speed. Learn more at slash.com.

Frequently asked questions

What is cryptocurrency?

Cryptocurrency is a digital form of money that uses blockchain technology to record transactions securely without the need for banks or intermediaries. It allows users to send, receive, and store value globally with low fees and near-instant settlement. Popular examples include Bitcoin, Ethereum, and stablecoins like USDC and USDT.

Is Bitcoin a stablecoin?

No. Bitcoin is a traditional cryptocurrency whose price fluctuates based on market demand. A stablecoin, by contrast, is a type of cryptocurrency pegged to the value of a fiat currency or commodity, designed to maintain price stability. USDT (offered by Tether) and USDC (offered by Circle) are the two most widely used USD-pegged stablecoins.

Can businesses use USDT or USDC for cross-border payments?

Yes. Stablecoins like USDT and USDC are increasingly used for international payments, offering faster settlement times and lower fees than traditional bank transfers. They eliminate the need for FX conversions and intermediary banking networks. Additionally, because USDC complies with MiCA and KYC standards, it’s a strong choice for B2B payments and other regulated business transactions.

Is it cheaper to send USDC or USDT?

Transaction costs depend on the blockchain network used. Stablecoin transactions on Slash start at 0.75% per transfer for both incoming and outgoing funds. For businesses with high volume or unique needs, Slash offers custom pricing.

Is converting USDT to USDC taxable?

In most jurisdictions, swapping one stablecoin for another can be considered a taxable event, even if both are pegged to the same value. The tax implications depend on local regulations and how your jurisdiction classifies digital assets. It’s best to consult a qualified tax advisor familiar with crypto transactions and business reporting requirements before making conversions.

What are Binance and Coinbase?

Binance and Coinbase are two of the largest cryptocurrency exchanges today. Binance offers the Binance Wallet for managing digital assets and operates the Binance Smart Chain, its own blockchain network. Coinbase, known for its simplicity and trust, provides the Coinbase Wallet and the Coinbase Layer 2 network, a secure, Ethereum-compatible blockchain.