Coinbase will list Tether’s USDT on its professional trading platform, allowing investors to deposit the dollar-pegged stablecoin immediately and to begin trading next week.
Coinbase Pro announced late Thursday it would immediately allow “inbound transfers” for USDT in its supported jurisdictions, except for the U.S. state of New York. The stablecoin has been fraught with controversy over questions of its backing and its role in the broader bitcoin ecosystem, which at one point became the subject of an inquiry by the Office of the New York Attorney General (NYAG).
The NYAG settled the inquiry this year, stating that at previous points USDT was not fully backed by U.S. dollars but declining to bring any enforcement or regulatory action. Under the terms of the settlement, Tether will provide a periodic report to the NYAG indicating how the stablecoin is backed and what its reserves look like, starting May 2021.
Tether has since announced it would provide regular attestations, though these are different from the reports it will send to the NYAG and similar attestations from stablecoin issuers like Centre, Paxos and Gemini.
USDT is listed on the U.S.-based Kraken and Binance.US exchanges, but Coinbase is subject to closer regulatory scrutiny, having gone public last week on the U.S. Nasdaq exchange. The public listing subjects Coinbase to oversight by the U.S. Securities and Exchange Commission, which could include its token listings.
As such, Coinbase’s move Thursday could be read as a vindication of sorts for Tether, long criticized as less-than-forthright about the composition of the reserves backing USDT.
“Starting immediately, we will begin accepting inbound transfers of USDT to Coinbase Pro. Trading will begin on or after 6PM Pacific Time (PT) Monday April 26, if liquidity conditions are met. Please note that Coinbase only supports ERC-20 USDT,” the announcement said.
The exchange will begin supporting trading against its order books after it has sufficient supply, with trading commencing in its usual post-only, limit-only and full trading phases.
“If at any point one of the new order books does not meet our assessment for a healthy and orderly market, we may keep the book in one state for a longer period of time or suspend trading as per our Trading Rules,” the blog post said.
While Coinbase Pro listed USDT, it’s unclear if or when the token will come to its consumer application. Typically, tokens listed on the professional platform are added to the retail side within a few days.
The move also follows a tough week for bitcoin, which has fallen 18% since Saturday. For the year to date, however, the bellwether cryptocurrency is still up a fulsome 75%.
As the largest stablecoin, USDT serves as integral plumbing for the $2 trillion global cryptocurrency market, allowing traders to easily shift dollars (or a good-enough substitute) between exchanges in order to capture arbitrage opportunities.
UPDATE (April 22, 23:50 UTC): Added context about bitcoin price and USDT’s systemic role and history.