United States-based cryptocurrency exchange Coinbase has asked its customers to convert their Tether-issued USDT (USDT) stablecoin to USD Coin (USDC), a USD-pegged stablecoin issued by Circle and co-founded by Coinbase in 2018.

The cryptocurrency exchange suggested that USDC is a much more secure alternative in the wake of the FTX collapse saga and has also exempted any fee on the conversion of USDT to USDC on its platform. The firm said:

Stablecoins started out as an onboarding tool for the crypto exchanges in the early days of crypto, but today they have become a key market player and liquidity source. However, there has always been some form of scrutiny around their reserves backing these stablecoins. A stablecoin, by definition, must be backed by 1 USD or equivalent.

The reserve debate intensified in the aftermath of FTX collapse as many firms with exposure to the tainted exchange and its sister company Alameda Research went bankrupt. There was another allegation about Binance CEO Changepeng Zhao trading barbs with former FTX CEO Sam Bankman-Fried and accusing him of trying to depeg USDT.

post-strike FTX scoop: Just before the bankruptcy, @cz_binance accused @SBF_FTX of trying to drive down the price of Tether. They traded barbs in a group chat with other crypto execs. “The more damage you do now, the more jail time," CZ said. https://t.co/OTlYgoEruJ

Tether published its latest quarterly attestation on Nov. 10, just a day before the exchange filed for bankruptcy. The report noted that 82% of Tether’s reserves are held in cash, cash equivalents and other short-term deposits as of Sept. 30, 2022.

Coinbase also stressed that USDC is 100% backed by “cash and short-dated U.S. treasuries held in U.S. regulated financial