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