The topic of stablecoins is very controversial in several ways, due to the fact that although it is supposed to be a token covered 1: 1 against the dollar, in most cases these tokens are covered by cash only to a very small extent. Circle’s stablecoin USDC wants to change the problem, announcing that by the end of September this year, their tokens will be 100% covered by cash.
Circle’s bold statement
Circle August 22nd issued a statement, in which says that by the end of September this year, 100% of their USDC tokens will be covered with cash dollars.
USDC is the second largest stablecoin on the market, with a capitalization of almost $ 27 billion. The USDT, with a capitalization of over $ 75 billion, is still fearlessly in the lead. However, Tether is a controversial stablecoin with several lawsuits due to doubts about 100% coverage of its tokens. It is known that USDT tokens are only partially covered by cash, and is mostly covered by commercial papers, bonds and the like. This can be a potential problem. However, there are also opponents who refer to these statements only as “Tether FUD” and do not attach any importance to them.
However, the USDC is going the other way. Circle earlier this month indicated that the digital bank with full reserves in the US. Regarding the plan, CEO and co-founder Jeremy Allaire said:
“We believe that full-reserve banking, built on digital currency technology, can lead not only to a more radically efficient, but also to a safer and more stable financial system.”
Private companies vs. banks
The project also appears to have the support of Federal Reserve Governor Christopher Waller, who supports the creation of private sector digital currency, as opposed to the central bank’s digital currency, which is increasingly popular among banks around the world. The private sector is already developing cheaper alternative payments to compete with the banking system.
However, stablecoins have recently come under increasing regulatory control as the chairman of the US Securities and Exchange Commission said they should be subject to securities laws. This reflects similar remarks by Finance Minister Janet Yellen, who has previously called for greater regulation of the cryptocurrency sector, stating that stablecoins pose a risk to the financial system and national security.
With the coming pressure of regulation, it is quite possible that more attention will be paid to the transparent coverage of all stablecoins. This can be a potential problem for some stablecoins, including Tether. It will be interesting to see if interest in the USDC rises or stays the same once it has 100% cash coverage.