Coinbase Custody Adds Support for USDT, Why Is it a Big Deal for Crypto Markets?

On Friday, Coinbase Custody rolled out support for Ethereum-based USDT (Tether). Currently, it supports three stablecoins USDC, DAI and Compound USD. ‘Coinbase effect,’ is a popular term in the crypto markets to explain the rise in the price of cryptocurrencies on the exchange listing.

In the last 10 days, the addition of two cryptocurrencies MakerDAO [MKR] and OmiseGo [OMG] have had a positive effect on their prices. The addition of OMG on Coinbase on 19th May followed an over 100% increase, while MKR (listed on yesterday) shot by 50% since the announcement. The arrow marks the day of the Coinbase listing announcement.

omg usdt charts — OMG/USD and MKR/USDT Daily Chart (TradingView)

Now, as Coinbase announces the addition of USDT, one cannot fathom the direct implications of it.

Coinbase Custody International (CCI) now supports deposits and withdrawals for the ERC20 token Tether ($USDT) https://t.co/y4NV8jgtUP pic.twitter.com/DwcxXLrFc9

— Coinbase Custody (@CoinbaseCustody) May 29, 2020

However, the addition of the leading stablecoin could help the leading western exchange to expand in Asia. Prominent crypto trader, CMS Holding, tweeted,

So tether rules Asian liquidity and if you want to tap that market in any capacity you need to get on their level, that means you need to allow them to seamlessly move in and out of their base currency, tether, and in and out of your exchange

Moreover, unlike other leading exchanges like Binance, Huobi or Okex, Coinbase does not support derivates/margin trading on its platform. This might be largely due to the regulatory constraints in the U.S. Nevertheless, last year it opened crypto-to-crypto trading in 103 countries from the 32 previously. The addition of USDT, which is the most common on-ramp medium to crypto in Asia will help in expanding the customer base of the US-based exchange.

Do you think Coinbase is likely to add a derivatives markets as well? Please share your views with us.

Disclaimer

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

About Author

Nivesh Rustgi

Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com