The company justified this decision by saying that USDC is "one of the most trusted and reputable" stablecoin.
“Tl;dr: USDC is one of the most trusted and reputable digital dollars, fully backed with high-quality reserves. Convert your USDT to USDC, now with zero fees.” - it is written in the message.
Coinbase also stressed that now after the collapse of FTX, stablecoins are subject to high volatility, but Circle's stablecoin is stable and its holders can be calm about their investments.
In their blog, Coinbase also stressed that they have been co-founders of USDC since 2018. This suggests to us that the transition of users from USDT to USDC may benefit Coinbase itself. It may also be a joint attempt by Circle and Coinbase to regain some of the lost market capitalization after the automatic conversion of USDC and other stablecoins into BUSD on the Binance exchange.
Remember that USDT and USDC are the largest stablecoins that constantly compete with each other and fight for the market. To date, according to CoinMarketCap, the market capitalization of Tether's stablecoin is $65,713,425,147 USD, and the capitalization of Circle's stablecoin is $42,828,147,147 USD.
Meanwhile, the Tether team looks quite calm and does not seem to see any threat in this situation. CTO at Tether, Paolo Ardoino, in his Twitter shared with subscribers a screenshot from Coinbase and stressed that everything is going well.
While the situation looks strange and it may not be immediately possible to assess the consequences of this decision, but again we see two of the largest and most competitive stablecoins as the main actors. We will continue our observations and inform you about new details of this story.