USDC change: removal of the words “covered by the US dollar”
2 min readStablecoin USDC it is no longer covered by the US dollar. Or rather, it is not only covered by the US dollar.
This definition is specified on the Coinbase platform. Until a few days ago, it was possible to read in the section dedicated to USD Coin on the Coinbase website:
“Secured by the US dollar. Each USDC is covered by one US dollar, which is held in a bank account. “
Now here is:
“Secured by reserve assets. Each USDC is covered by one dollar or equivalent fair value asset that is held in accounts with US regulated financial institutions. ”
There are several reasons for this specification.
USDC and reserves
The USD Coin recently revealed its reserves. The report showed that of the $ 22 billion in circulation, only 61% is cash or cash equivalents (about $ 13.4 billion). Then there are securities, treasury bills, bonds and other forms of money.
The very revelation of this report, which confirms that the USDC is fully secured by reserves, has effectively refuted the claim that there is one US dollar in each bank account in each bank.
The USDC was essentially forced to follow the path taken by Tether. The king of stablecoins has already revealed his reserves in March. This was not only due to known legal issues, but also to maintain investor confidence. Again, it wasn’t just about cash. The USDC had to opt for full transparency, as did its competitor.
It was a wise decision for Tether, and it is no coincidence that its market capitalization is still growing: it currently exceeds $ 60 billion, a sign of strong market demand.
As for the USDC, there is another reason to change the definition to Coinbase: Janet Yellen, the US Treasury Secretary, is determined to regulate stablecoins. In practice, cryptocurrencies with a stable value are breathed on the neck by the authorities.
Finally, there is ambition: as Jeremy Allaire explained in a blog post, Circle wants to become a full-reserve national bank of digital currencies.
“Circle intends to become a national commercial bank with full reserves, operating under the supervision and risk management requirements of the Federal Reserve, the US Treasury Department, the OCC and the FDIC. We believe that full-reserve banking, based on digital currency technology, can lead not only to a more radically efficient, but also to a safer and more resilient financial system. ”
Basically, this is just the beginning of a long journey.
