USD Coin (USDC) is a stablecoin that is pegged 1:1 to the US dollar. Each unit of this circulating cryptocurrency is backed by $1 in cash and short-term US Treasury bills held in reserve. According to the central syndicate behind this instrument, USDC is issued by licensed financial institutions.
Stabilcoin was first introduced on a small scale in September 2018. Simply put, the USD Coin’s slogan is “digital money for the digital age.” At the same time, Stabilcoin has been redesigned for a world where cashless transactions are becoming more common.
Overview of USD Coin and Its Advantages
Several use cases have been identified for the USD Coin. According to its creators, the stablecoin could not only provide a safe haven for crypto investors in times of instability, but also allow businesses to accept payments with digital assets and disrupt various sectors, including decentralized finance and gambling.
The goal is to create an ecosystem where as many wallets, exchanges, service providers and decentralized applications (dApps) accept USDC as possible.
Who Founded USD Coin?
The original members of the Centralized Consortium are two companies. The first is Circle, a startup that provides peer-to-peer payment services, and the second is bitcoin exchange Coinbase. Other cryptocurrency companies are invited to join the group.
“We believe that an open internet of value exchange can more profoundly transform and integrate the world by removing artificial economic boundaries and enabling a more efficient and inclusive global marketplace that connects everyone on the planet,” Circle co-founders Jeremy Allaire and Sean Neville wrote.
In 2020, Circle and Coinbase announced a significant improvement to the protocol and smart contract for USDC. The goal of these changes is to make USD Coin easier to use for everyday payments, trading, and peer-to-peer transactions.
Why is USDC unique? Is this coin safe?
In recent years, the stablecoin industry has become highly saturated, but USD Coin has tried to stand out in several ways.
One of them is transparency and assurances that consumers can easily withdraw 1 USDC and receive 1 USD. According to reports, a major accounting firm has been hired to verify the amount of cash reserves and guarantee that it matches the number of tokens in circulation.
Unlike other cryptocurrency companies, Circle and Coinbase have demonstrated the possibility of global development by ensuring regulatory compliance. Both startups are well-funded and provide stability for the stablecoin.
As we researched for you, Circle recently considered diversifying funding for USDC, but abandoned that plan in the face of overwhelming community opposition. USDC’s success is largely due to the openness of its funding sources. Unlike its competitor USDT, which has been the subject of numerous investigations, USDC has never been accused of wrongdoing. This has allowed USDC to challenge USDT for much of its dominance in the stablecoin market. In February 2021, USDT had a 74%:16% market share advantage, but by February 2022, that had fallen to 45%:30%.
How many US dollar coins are held in reserves?
Following the delisting of TerraUSD, stablecoin issuers will be subject to strict scrutiny regarding the reserves backing their tokens. In the name of transparency, Circle Internet Financial LLC (Circle), the issuer of the USDC stablecoin, has published its reserves report as of July 31, 2022.
The report shows that the company’s USDC reserves consist entirely of $42.3 billion in U.S. government bonds and $12.2 billion in cash deposits. The monthly reserves report was prepared by Grant Thornton, a leading global accounting firm.
Subsequently, the accounting firm issued an independent audit report on August 24, 2022. This report contains the following findings:
In accordance with the standards set forth in the USDC Reserve Report, the reserve information presented in the following USDC Reserve Report is accurate in all relevant respects as of July 31, 2022.
Staying Up to Date with the Latest USD Coin Developments
USDC has continued to differentiate itself from other stablecoin startups in what appears to be a lightly regulated space by building relationships with established financial institutions.
Following a $400 million funding round involving BlackRock, Fidelity, Fin Capital and Marshall Wace LLP, BlackRock said it has “initiated a major strategic agreement with Circle that includes exploring capital markets use for USDC.”
The stablecoin provider has expanded its partnerships by joining forces with not just the biggest asset manager globally, but also well-known names in traditional finance. As reported in March, BNY Mellon, the oldest bank in the US, will act as the main custodian for assets supporting USDC stablecoins, while BlackRock will be responsible for managing USDC’s cash reserves, as stated in a press statement.
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