Coinbase removes ‘backed by US dollars’ claim for USDC stablecoin

Aug 16, 2021 0 comments

image: fortune.com.

USD Coin (USDC), Circle’s dollar-pegged stablecoin, appears to have lost one of its primary competitive advantages against Tether (USDT) (USDT). Following an audit that revealed that not all of USDC’s reserves were stored in cash, major crypto exchange Coinbase made a significant update to the USD Coin page on its website. The previous statement that “each USDC is backed by one US dollar held in a bank account” was contradicted by this.

Visitors to Coinbase’s USD Coin page are now greeted with a statement claiming that USDC is “backed by 100 percent reserved assets.” The following is the new claim:

“Each USDC is backed by one dollar or an asset with an equivalent fair value, which is stored in US regulated financial institutions’ accounts.”

With a market capitalization of nearly $28 billion, USD Coin is the eighth-largest cryptocurrency. According to the latest Consolidated Reserves Report, USDC is the second-largest stablecoin after Tether, which has almost $63 billion in total assets.

With a market capitalization of almost $28 billion, USD Coin is the eighth-largest cryptocurrency. According to the latest Consolidated Reserves Report, USDC is the second-largest stablecoin after Tether, which has almost $63 billion in total assets.

However, an audit by Grant Horton, a multinational tax consultancy firm, revealed that 61 percent of USDC’s reserves were maintained in cash and cash equivalents, with only 9% held in commercial paper. Cash is defined as deposits at banks and Government Obligation Money Market Funds, while cash equivalents are securities with an original maturity of less than or equal to 90 days, according to the audit report.

The USDC reserves are made up of Yankee certificates of deposit and US Treasury bonds, according to the paper, and are not “fully backed by US dollars deposited in a bank account.” The phrasing for the USD Coin on the Coinbase website was updated the day the mainstream media contacted Coinbase about the claim and related marketing material, according to Bloomberg.

According to a Coinbase spokesman, each USDC is backed by $1 or an item of comparable market value and Users can always exchange one USD Coin for one dollar. They have also added extra information to the website so that clients can learn more about USDC reserves.”

Circle, which manages USDC alongside Coinbase as part of The Centre Consortium, recently revealed aspirations to become a full-service national digital currency bank in the United States. Circle CEO Jeremy Allaire stated that the company is willing to operate under the supervision of regulators and comply with risk management criteria.

He also stated that USDC will grow to “hundreds of billions of dollars in circulation,” continuing to support high-trust economic activity and becoming a popular instrument in financial services and online commerce applications, as part of the announcement.

Sourced from techstory.in.

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