Is USDT fungible?

The essential point to note is that despite the similarity in appearance, U.S. dollar stablecoins are not entirely uniform. This is because while they are all pegged to the dollar, there are differences among them.

For instance, Tether's USDt, Circle's USDC, and PayPal USD are all U.S. dollar stablecoins. They share the common characteristic of being backed by the value of the U.S. dollar. However, this does not mean that they are interchangeable or fungible with each other.

Fungibility refers to the ability of one asset to be readily substituted for another asset of the same type. In the context of stablecoins, if two stablecoins were fungible, it would mean that one could be easily exchanged for the other without any loss of value or change in characteristics.

Unfortunately, this is not the case with U.S. dollar stablecoins. Despite their shared peg to the dollar, they are issued by different entities and operate under different regulatory frameworks. This can lead to differences in liquidity, redemption processes, and even the level of trust in the issuer.

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