Bitfinex recently moved toward “Tether neutrality,” breaking its special bond with Tether (wherein it was the most reliable way to redeem USDT for USD) and in turn, Tether, with nearly $2 billion it outstanding units, had to re-establish direct redemption for USDT holders to USD. Those still wanting to use the Bitfinex method will have to trade at normal rates, which are frequently not-quite-pegged to the dollar.
Well, fine. But here’s the problem: Tether’s fees and limits are sort of outrageous, especially compared to its much more recent competitors. Paxos Standard (PAX) has no redemption fee but a minimum of $100. The same with Circle’s USD Coin (USDC). But Tether? Well, to even consider redeeming your USDT for USD with Tether proper, you’ll need to be doing it $100,000 at a time. You’ll pay a minimum fee of 0.1% to make a deposit and acquire USDT, and there are three tiers of withdrawal fees: 0.4% at $100,000 or more, 1% at $1 million or more, and 3% at $10 million or more.
These fees are not inconsequential, and the size limits mean that primarily large operations like crypto exchanges will be using them. After all, $100,000 only goes into $1.8 billion 1800 times. $1.8 billion is roughly the size of the USDT market at the time of writing. Additionally, clients are only allowed to make conversions and transactions once per week, while Paxos at least has a daily schedule of when transactions are processed.
The move is non-competitive. It puts both Paxos and USD Coin in a stronger position, and each has been steadily growing. Gemini Dollar (GUSD) is mainly used on its issuing exchange, Gemini, so I leave it out of this article.