1 redeemable for US {dollars}

In a latest report on the state of the USDC financial system, Circle devoted a piece on the stablecoin “at all times” being 1:1 redeemable for U.S. {dollars}.

Total, 2022 was a difficult yr for USDC, with allegations of insolvency and accusations of censorship being fired on the stablecoin.

Nonetheless, in recapping its strategy to the ecosystem and outlook forward, Circle mentioned it had saved its basic promise of greenback parity regardless of the industry-wide stress check of final yr.

Furthermore, with the rising consensus in favor of “digital {dollars},” the longer term appears to be like brilliant for well-regulated and trusted choices. In accordance with the report:

“The promise of well-regulated digital {dollars} like USDC is fulfilling issues that might not be attainable with cash if it remained in bodily type and solely traveled on largely-closed networks or analog rails.”

USDC is “at all times” redeemable

In accordance with Circle, the corporate has redeemed $213 billion since its launch in 2018. That is attainable due to the prudent administration of USD property backing the token.

On that, 80% of the asset reserves relate to 3-month U.S. Treasuries, “that are among the many most price-stable and liquid property on this planet.” On the identical time, the remaining 20% is held as money throughout eight completely different U.S.-regulated banks.

Moreover, Circle is regulated and licensed underneath U.S. state cash transmission licenses and as a cash providers enterprise (MSB) with the U.S. Treasury — that means it follows know your buyer
(KYC), anti-money laundering (AML), and monetary terrorism guidelines.

Customers will be additional assured by month-to-month attestations from the accounting agency Grant Thornton that the corporate has extra dollar-denominated reserves than USDC tokens in circulation.

“Now we have created a strong, risk-intelligent working surroundings by embedding proactive and holistic identification, evaluation, mitigation, monitoring, and reporting of dangers and controls inside all our enterprise and product strains, capabilities, and processes.”

Circle controversies

Within the wake of the Twister Money sanctions imposed by the U.S. Treasury and Circle’s compliance with censorship mandates, USDC has suffered from reputational injury.

On the time, ShapeShift CEO Erik Voorhees really useful MakerDAO customers convert USDC for an additional, extra censorship resistance stablecoin. Likewise, Ryan Adams of the Bankless Podcast mentioned the actions of the U.S. Treasury have been “the opening shot of massive brother’s assault on crypto.”

As well as, as crypto contagion unfold from the collapse of Luna, 3AC, Babel, and Celsius, rumors have been circulating that Circle was additionally on the point of collapse on account of their purported publicity.

The rumors have been rapidly shut down following the discharge of the primary USDC reserve asset report in July 2022.

Commenting on censorship and account blacklisting, Circle CEO Jeremy Allaire mentioned the corporate is legally required to adjust to requests from authorities investigating prison exercise.