What is the Difference Between USDC and USDT?

USDC (USD Coin) and USDT (Tether) are two of the most widely used stablecoins in the cryptocurrency market. 

Both are designed to maintain a stable value, offering a stable and reliable alternative to the volatility of other cryptos while bringing in the benefits of blockchain networks. Their core purpose is to facilitate seamless, stable-value transactions, but what is the difference between USDT and USDC?

In this guide, we will break down the top stablecoins in the market. Here you will find key features of USDC and USDT, differences in stablecoin payments, and appropriate use cases for each option. 

If you stick around, by the end you will also find tips for picking the right crypto payment gateway for businesses that support USDT and USDC.

Disclaimer: As USDT no longer meets EU regulatory requirements and is being phased out, now is a good time to consider switching to compliant alternatives like USDC.

Quick Answer: USDT vs USDC – What’s Better?

As we take a closer look at the difference between USDC and USDT, we have two stablecoins pegged to the U.S. dollar, but different transparency, backing assets, and intended use cases. 

USDC is known for its transparency, being fully backed by audited reserves held at regulated financial institutions. USDT is more popular and highly liquid, but its regulatory environment is more complex, with reserves held across multiple jurisdictions but less transparency.

USDC is primarily used for trading, payments, and as a store of value, while USDT is more commonly used for trading on various cryptocurrency exchanges. 

Since USDC is MiCA-compliant, businesses prioritizing compliance and transparency may lean toward USDC, while those focused on liquidity might prefer USDT.

Key Takeaways

• USDC vs USDT. USDC prioritizes transparency and regulatory compliance, while USDT leads in liquidity and global adoption.
• Transparency. USDC provides monthly third-party audits and is fully backed by cash and U.S. Treasuries. USDT has a more complex reserve composition and less frequent attestations.
• Use Cases. USDT excels in trading environments and high-frequency transfers, while USDC is better for regulated financial services, payroll, and transparent transactions.
• Blockchain Support. USDT operates on more blockchains, contributing to a higher market cap. USDC, however, still supports 11 major chains and its integration keeps growing.
• Transaction Fees. USDT on Tron and Solana offer low-cost transfers; USDC’s fees vary more by network but offer flexibility for regulated use.
• Business Fit. USDC adoption is better for stability and compliance. Choose USDT if you need liquidity and a wider reach for speed and reach. Use both strategically based on transaction needs.
• Market Trends. USDC is gaining traction and may close the gap in market cap with USDT due to its institutional credibility.
• Payment Integration. CoinGate enables businesses to accept USDC with minimal fees, multi-network support, cross-border capability, and integration ease.

What is USDC?

USD Coin (USDC) is a quickly growing stablecoin, issued by Circle and Coinbase through the Centre Consortium. Each minted token is backed 1:1 by cash and short-term U.S. government bonds to make sure it maintains a consistent value. But what makes it stand out from other options?

USDC maintains complete transparency through regular third-party audits and monthly attestations, providing users with undeniable proof of its reserve backing held in regulated financial institutions. Since its launch in 2018, USDC has become an important token, enabling fast and low-cost transactions powered by crypto, but without its constant price changes.

So, what is USDC? It is a stablecoin that combines robust backing, transparent operations, regulatory compliance, and stable currency value for trading, DeFi applications, and cross-border transactions, distinguishing it from other stablecoins in the market.

How Does USDC Work?

USDC operates through a dual-issuer model, with Circle SAS and Circle LLC issuing tokens that are fully fungible with each other. Regardless of which entity issued it, it is completely interchangeable with any other USDC token. Users deposit USD directly into Circle’s bank account, immediately triggering smart contracts to mint an equal amount of USDC tokens.

To better understand how USDC works, it’s important to tackle how the coins are minted, as well as their blockchain support. USDC does not have its blockchain. Instead, it maintains a multi-chain architecture of 11 blockchains with Ethereum as the most popular option. 

Each chain offers distinct advantages in terms of transaction speed, costs, and ecosystem compatibility as many modern vendors start adopting USDC payment gateways.

How Does USDC Peg Work?

With confidence and strict oversight of the Centre Consortium, USDC maintains its 1:1 USD peg regardless of the chosen blockchain. Monthly attestations from independent accounting firms verify its heavily regulated, 100% reserve backing.

USDC pegs tokens with cash and safe government assets, and its regulatory compliance helps maintain a stable price under any market conditions.

What are USDC Fees?

USDC fees can be drastically different depending on the blockchain network. However, some holders don’t mind higher fees on chains like Ethereum because it is the most popular version of the token plus a bigger infrastructure to find who accepts USDC. 

Let’s break it down so we can compare USDC vs USDT transfer fees later.

• Ethereum (ERC-20): The most secure and widely adopted USDC implementation with DeFi compatibility, though at higher transaction costs ($5-$50+) and variable processing times.
• Solana (SPL): Provides ultra-fast transaction processing with minimal fees ($0.00025-$0.0005), but only supports about 30% of DeFI platforms compared to ERC-20.
• Polygon (MATIC): Delivers a balanced solution with moderate fees ($0.001-$0.01) and solid DeFi support through its EVM compatibility.
• Algorand (ASA): Features near-instant transaction finality with very low fees ($0.0001-$0.001) and a carbon-negative footprint, but only works with about 10% of Ethereum’s DeFi integration options.
• Stellar (XLM): Specializes in cross-border payments with minimal fees ($0.00001-$0.0001) and efficient processing, optimized specifically for international transfers, very limited for DeFi operations.

What is USDT?

Tether (USDT), the largest stablecoin by market capitalization, has become the largest stable crypto in the market since its launch in 2014. Pegged 1:1 to the U.S. dollar, USDT has become a crucial tool for traders and investors trying to avoid crypto volatility while benefiting from blockchain technology.

However, to better understand what USDT is, we must look at the backing behind its 1:1 peg. Tether holds a mix of assets, including cash, cash equivalents, short-term deposits, commercial paper, and even other cryptocurrencies like Bitcoin.

While USDT is the king of liquidity and widespread adoption across available stablecoins and numerous cryptocurrency exchanges, questions persist about the composition and management of its backing assets. Tether’s reserve disclosures have revealed a diverse portfolio, including cash, cash equivalents, secured loans, and even digital assets like Bitcoin.

This complex reserve structure has raised concerns among some market participants about the stablecoin’s ability to maintain its peg during periods of market stress. Despite these challenges, USDT remains the go-to currency for many crypto traders due to its early-mover advantage and deep market penetration.

How Does USDT Work?

USDT operates on various blockchains, including Ethereum (ERC20), Tron (TRC20), and Algorand. Unlike USDC, its backing includes more diversified assets, such as commercial paper and corporate bonds.

While this provides operational flexibility, it brings enough uncertainty that makes holders question just how stable it is.

Tether has increased its reporting frequency and detail, and despite skepticism, USDT remains a core liquidity tool in crypto trading, international transfers, and online shopping on platforms with a USDT payment gateway. 

How Does USDT Peg Work?

USDT maintains a 1:1 dollar peg through reserves held by Tether Ltd., with the company claiming these reserves are fully backed by a combination of cash, cash equivalents, and other assets. However, because not all of these reserves are in cash, and the Tether’s tendency to stall detailed audits and periodic attestations, diminished the level of trust among holders.

Still, USDT’s consistent performance during market fluctuations has reinforced the trust in USDT pegging, granting high liquidity and widespread adoption across exchanges for crypto holders.

What are USDT Fees?

Ethereum (ERC-20): Despite high fees ($5-$50+), ERC-20 USDT is still at the top due to its liquid and widely-accepted implementation and support for DeFi protocols.

Tron (TRC-20): With significantly reduced fees ($0.0001-$0.001), Tron’s USDT implementation offers a cost-effective alternative while maintaining a substantial market presence, though with more limited DeFi integration options compared to Ethereum.

Binance Smart Chain (BEP-20): BEP-20 offers 98% lower fees than ERC-20 ($0.001-$0.01), but its limited implementation primarily serves the Binance’s ecosystem.

Solana (SPL): With very low fees ($0.00025-$0.005), Solana’s USDT prioritizes speed and efficiency, serving users who value rapid transaction processing over extensive DeFi protocol support.

Avalanche (AVAX): Avalanche’s USDT implementation focuses on basic transaction efficiency, providing a cost-effective solution for straightforward transfers while maintaining core functionality and low fees ($0.0001-$0.001).

Key Differences Between USDC and USDT

USDC and USDT are the most popular stablecoins in the crypto market. Designed to maintain a stable value by pegging to the US dollar, both are essential tools for businesses and traders looking to avoid crypto volatility. So what is the difference between USDC and USDT? From compliance and transparency to liquidity and trading volume, knowing these differences is the key to choosing your currency.

USDC is designed for users focusing on regulated markets and institutions that need to follow strict banking rules while benefiting from blockchain technology. USDC provides regular financial reports and keeps its money in regulated banks, making it a safer choice for companies that need to follow strict financial rules.

Meanwhile, USDT is more focused on being widely available and easily tradeable across different markets, making it easier to buy, sell, and trade even if it causes stability and trust concerns in its backing.

This difference in approach means USDC is typically preferred by banks and financial institutions, while USDT is more commonly used by individual traders and in international transactions. However, USDC is catching up to USDT in transaction volume. Despite having a smaller market capitalization USDC has surpassed USDT in transaction volume in the US.

In our technical USDC vs USDT comparison, the existing infrastructure also reflects their differences, as USDC operates on 11 major blockchains including Ethereum, Avalanche, and Solana, while USDT has expanded to a broader range of chains including Tron, EOS, and Omni. Better blockchain support is a big deal and one of the main reasons for USDT’s larger market capitalization. Still, USDC’s stronger emphasis on compliance, transparency, and monthly inspections continues to make it the go-to crypto for businesses looking for trustworthy, payment solutions.

Why Choose USDC?

So why choose USDC if USDT creates more opportunities? While the blockchain technology is the key to modernizing transactions, many holders and businesses prioritize regulatory compliance and financial transparency that ensures its stable value. It’s ideal for companies operating in heavily regulated markets or dealing with financial reporting obligations. The monthly audits and backing by reputable financial institutions make USD Coin a dependable tool for secure, verifiable transactions. Stablecoins have to be stable, and USDC does more to minimize price changes with strict regulatory compliance.

Why Choose USDT?

For crypto holders focused on rapid transaction settlements and access to a large network of trading pairs, USDT is a more flexible option. Its high liquidity and broad adoption across crypto exchanges make it ideal for quick, cross-platform settlements.

So why choose USDT? In 2025, it is still a better option for operations in markets where speed and cost efficiency are prioritized over transparency.

Use Cases: When to Choose USDC vs USDT

Let’s take a closer look at use case examples between USDC and USDT so you can diversify your assets and use them according to the task at hand.

In trading environments where speed and volume matter, USDT is often preferred due to its unmatched liquidity thanks to massive market capitalization and widespread adoption. Its the best choice for traders who need to quickly move in and out of positions with a stablecoin without worrying about price slippage on large orders. It may not be as stable as USDC, but its easier to move and exchange USDT.

For payroll, remittances, and other scenarios that prioritize stability and transparency, USDC is the better option. Its commitment to monthly reserve audits and strict regulatory compliance provides assurance for handling sensitive financial transactions like employee compensation and cross-border money transfers.

Both USDT and USDC are widely accepted in DeFi and Web3 platforms. Meanwhile, as more vendors begin to adopt and reap the benefits of accepting crypto, you will likely encounter many shops accepting the most popular stablecoins on the market.

International Business Payments: USDC or USDT?

When it comes to cross-border payments, both stablecoins offer faster and cheaper solutions than traditional wire transfers. Our USDC vs USDT comparison has revealed that USDC is favored by businesses needing verifiable stability and compliance. Meanwhile, USDT’s liquidity creates easier access to currency conversion and trading.

For international payments, USDT is generally the better choice due to its broader global acceptance and higher liquidity across international markets. However, if you can confirm that your specific payment gateway supports USDC, then its stability and compliance make it a better option.

Risks and Considerations

Both USDC and USDT carry risks, but USDC’s proactive compliance makes it more stable and secure. Regulatory pressure is growing on stablecoins, and USDT’s issuer Tether already faced legal issues over its reserves that started a regulatory enforcement action. 

USDC is safer because it holds reserves in regulated and audited institutions and is compliant with the EU laws and regulations, while USDT’s reserve composition has already caused concerns in the past.

Which Stablecoin Is Better for You?

After extensive research and testing, we cannot give a straight answer to the USDC and USDT comparison because their effectiveness depends on your use cases and values. If transparency, regulatory compliance, and accountability are top priorities, USDC will be a better option. Meanwhile, if your operations demand wide market access, high liquidity, and faster settlement options, you will do more with USDT – the biggest stablecoin on the market.

Ultimately, both stablecoins offer distinct advantages but trends matter, and USDC proactive approach and regulatory compliance may help it overtake USDT by market cap in the near future. Of course, the market is hard to predict, and as the percentage of vendors that get crypto traffic continues to grow, the landscape of stablecoins and their implementation can change.

Choosing a Payment Gateway for USDC and USDT Transactions

To get the best of both worlds, modern companies can implement a crypto payment gateway for businesses that accept USDC and USDT. Here are the main parameters to look for:

• Features. Look for providers with multi-currency support, Point of Sale (PoS) integration, real-time settlements, API Integration, and strict security compliance.
• Fees: Flat fees are best for smaller businesses, while tier-based discounts favor growing companies. Try to avoid setup and monthly fees.
• Supported Currencies: Look for a provider that supports UDSC, USDC, and other cryptos for better client outreach.

For example, CoinGate has been a go-to option for businesses of all sizes, helping them expand their reach with borderless payments while contributing to the widespread adoption of USDC and USDT. Alongside other cryptos, it supports SEPA/IBAN bank withdrawals, converts crypto to fiat automatically, offers crypto invoicing, and integrates with e-commerce platforms or API.

Get Started with Crypto Payments

Stablecoins like USDC offer businesses a secure, scalable, and efficient method for handling global payments. Whether you value regulatory compliance or market liquidity, CoinGate can help integrate stablecoins into your payment ecosystem. 

Sign up today to take advantage of low fees, rapid settlement, and international reach with the most popular stablecoins.

USDC vs USDT FAQs

Are USDC and USDT both fully backed by reserves?

USDC is fully backed by cash and short-term government securities. USDT is backed by a mix of cash, bonds, and other financial instruments, but not all are cash equivalents.

Which stablecoin is safer to hold, USDC or USDT?

USDC is considered safer due to its transparent audits and regulated reserve management. USDT’s safety depends more on trust in Tether’s reserve disclosures.

Is USDT equal to USDC?

Yes, both USDT and USDC are stablecoins designed to maintain the value of $1 USD. However, their differences in reserve management can affect how far the currency deviates from intended value, especially during market stress.

Is USDT still safe to use?

Yes, USDT is still widely used, but businesses should monitor updates to its reserve policies and regulatory developments, even though it is the biggest stablecoin on the market.

Is USDC still safe to use?

Yes, USDC is one of the most secure and transparent stablecoins on the market due to strict regulatory compliance and monthly audits by top accounting firms.