Circle has published a transparency report for its USDC stablecoin, disclosing that most of the $22.2 billion supply is backed by cash and cash equivalents.
Circle, the company behind USD Coin (USDC), has published a transparency update for reserves backing USDC, following up on its promise to become more transparent. The firm outlines the pillars backing the idea that all USDC is backed on a 1:1 basis with dollar-denominated assets.
Three pillars of USDC
Of these three pillars, the first is to ensure “the highest levels of regulatory and prudential standards governing the USDC ecosystem.” This will be supported by the attestations from accounting firm Grant Thorton and that it had received its 33rd attestation from the firm just yesterday.
The attestation notes that there are approximately 22 billion USDC in circulation, with most of it backed by cash and cash equivalents. This cash includes deposits at banks and Government Obligation Money Market Funds.
Roughly 61% of this is backed by cash-related assets, while 13% are reserved via Yankee CDs, 12% via U.S. Treasuries, 9% via commercial paper, and 5% via corporate bonds.
Its last guiding principle makes a nod towards the quickly changing U.S. regulatory landscape, saying that the USDC’s core activities are contained within the U.S. financial system. It’s this last point that emphasizes preempting the disclosure of reserves, even though stablecoins are required to do so by law.
Greater transparency welcome
Crypto investors will likely be pleased to see the disclosure, as market participants in the past have in the past showed skepticism — especially with Tether and its reserve controversy. While USDC is not the market’s leading stablecoin, it does intend to “continue leading the sector with greater transparency and a deeply committed model of public-private collaboration.”
Generally speaking, there is a movement towards compliance within the industry itself, in addition to the growing external pressure to follow KYC/AML and fraud protection measures. This seems like it will be critical for stablecoins, which are facing growing regulatory scrutiny.
All of this is taking place as Circle moves forward in its path to become a public company, which CEO and co-founder Jeremy Allaire announced in early July. The listing is expected to arrive in late 2021, with a tentative valuation of $4.5 billion. Circle also managed to secure the largest investment round in crypto history with a $440 million fundraiser in May.
The post Circle: Over 60% of USDC Backed by Cash and Cash Equivalents appeared first on BeInCrypto.