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Circle’s USDC Stablecoin Is “100%” Backed by USD and US Debt, Says Circle’s CEO  


cryptoknowmics.com 09 December 2021 14:26, UTC
Reading time: ~2 m

On Wednesday, Circle, a digital payments startup, told a House committee that its USDC stablecoin is entirely backed by the US dollar and short-term government debt, responding to a question concerning the company's recent shift in the reserve components of the digital coin.

Circle's USDC Backed by USD and US Debt

Stablecoins are a cryptocurrency linked to a fiat currency, government bond, or precious metal.

"Yes, I can confirm that 100% of the reserves that back USDC are held in cash and short-duration US Treasuries," Jeremy Allaire, CEO of Circle, told members of the House Financial Services Committee.

He responded to a question from Rep. Nydia Velázquez, a Democrat from New York.

Circle Kept its Promise on USDC's Reserves

In September, Circle announced it would keep all of USDC's reserves in cash and short-term US government treasuries. After an audit issued in July revealed that around 61 percent of USDC's funds were backed by cash-related assets, with the balance made up of a mix of US Treasuries, Yankee CDs, commercial paper, and corporate bonds, the corporation disclosed the change in reserve composition. According to the business, the stablecoin is a 1:1 copy of a US dollar on the Ethereum blockchain.

"The money-transmission statutes throughout the United States have governed USDC, as have the acceptable investment requirements of money-transmission legislation, the same statutes that govern the $US35 ($AU49) billion in balances held by PayPal, Square, and other fintech," Allaire explained. "As a result, we've always complied with the law, and I believe we've reported on that every month since USDC debuted in 2018."

Velázquez also asked Paxos CEO Charles Cascarilla the same question. The Pax Dollar or USDP stablecoin is managed by Paxos.

"We have always only backed our stable coin by short-term Treasuries or cash and cash equivalents," said Cascarilla. "And the reason we did that is that we have a regulated stable coin. We're overseen by the New York Department of Financial Services," he said. 
Cascarilla continued, "We operate through our trust company. We have a primary regulator – that primary regulator also regulates our token. And importantly, that primary regulator sets the supervisory agreement with which we can offer our products then, so this was a statutory requirement for us."

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