Based in Boston, Circle started in 2013 as a way to quickly and easily send money. The company quickly found its way into crypto and announced that they had acquired crypto exchange Poloniex in April 2020. According to Kraken, USD Coin transactions take about five minutes to complete and require 20 confirmations. That’s similar to other coins that run on the Ethereum blockchain. Every USDC is backed by a U.S. dollar in a bank account audited monthly by accounting firm Grant Thornton.
Who Are the Founders of USDC?
Recent data from the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) point to an ongoing gradual decline in the dollar’s share of allocated foreign reserves of central banks and governments. Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies—the euro, yen, and pound. The most recent data extend this trend, which we had pointed out in an earlier IMF paper and blog. Moreover, USDC is heavily utilised in the DeFi sector, as it is employed on various decentralised applications (dapps) to earn rewards through lending or staking on platforms like AAVE. These lending protocols enable users to achieve higher returns on their assets compared to traditional bank savings accounts.
Fully backed digital dollars
These include Gemini dollar, True USD, Paxos, and US Dollar Coin (USDC). Purchasing USD Coin won’t generate any returns for investors, as it is intended to be a stablecoin. So the advantage of this crypto is more about its usage, as there isn’t an expected price appreciation with this coin. As of May 2022, Circle announced that the company would provide weekly attestation reports. They help build trust in USDC, as they disclose the precise amount of actual funds backing the stablecoin. As its name suggests, USD Coin (USDC) is a cryptocurrency whose value is tied to the U.S. dollar.
How Much Bitcoin Is in Circulation?
Most of these platforms allow you to deposit an equal amount of USD Coin and another cryptocurrency into liquidity pools that are used to facilitate crypto trading. This passive income method carries much greater risk, but you could earn a larger return. USD Coin has inked several major deals that could help it dramatically expand as a payment method and cryptocurrency.
- USDC is issued by Circle, a company in the private sector, while a CBDC would be issued by a government.
- In July 2021, Mastercard (MA 1.02%) announced plans to incorporate USD Coin as a payment method.
- Dollar Coin created, there is supposed to be an equal amount of dollar assets held at Circle.
- Before diving into USD Coin, let’s first understand the concept of stablecoins, which are a type of cryptocurrency designed to have a stable value.
- The company aims to change the global financial landscape by connecting every person, merchant, financial service, and currency worldwide.
How does the US Dollar Coin work?
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- USD Coin (USDC) is a digital stablecoin pegged to the United States dollar.
- USDC’s founding companies have extensive experience in the cryptocurrency world.
- When facing significant market volatility, cryptocurrency traders often turn to USDC as a stable holding while waiting for asset prices to stabilise.
- USDC’s cash assets are held in segregated accounts with regulated U.S. financial institutions and its reserve portfolio is held at the Bank of New York Mellon.
Some platforms offer users interest payments in exchange for USDC deposits. Celsius and Vauld are among those that reward users for offering their USDC as collateral to be lent out to other users. It’s worth noting that there is risk involved with this activity. Dollar Coin created, there is supposed to be an equal amount of dollar assets held at Circle. New coins are minted every time someone buys or converts currency and acquires USD Coin.
Though USDT has the largest market capitalization among all stablecoins, USDC has its advantages and differences among its peers. However, in January 2021, the US Office of the Comptroller of the Currency (OCC) issued guidance stating that banks may use blockchains and stablecoins https://www.tokenexus.com/ to facilitate payments. Unsurprisingly, Jeremy Allaire, co-founder and CEO of Circle, was elated, tweeting that it was “a huge win for crypto and stablecoins.” Users should also be aware of the regulatory landscape surrounding digital currencies and stablecoins.
Xe Currency Data API
This reserve is meant to ensure there is a direct and auditable link between the USDC tokens in circulation and the actual US dollars held in reserve. USDC was also developed in order to be used by businesses and individuals alike. As USDC provides an open-source smart contract, this allows other companies to develop their own blockchain products, such as wallets and exchanges. However, those who want to use the U.S. dollar as a payment or reward system for their customers, employees or partners can access these services easily through USDC’s Payouts solution.
Treasuries, one of USDC’s core value propositions is that a financial institution can hold it without fear of fluctuation. This is an important step forward for the crypto market, as it allows regulated institutions to begin offering crypto products without worrying about volatility risk. One of them is the peer-to-peer payment services company Circle, while the other is the Coinbase cryptocurrency exchange. After a customer meets the Know Your Customer (KYC) identity requirements, they can link their bank account and make a wire transfer in US Dollars. That money is then converted into USDC, and the customer can use an exchange to trade it for other cryptocurrencies.