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Circle: USDC stablecoin is always 1:1 redeemable for US dollars Circle: USDC stablecoin is always 1:1 redeemable for US dollars

Cryptocurrency

1 redeemable for US dollars – Crypto News

Published

3 years ago

on

Haru Invest

In a recent reports on the state of the usdc economy, Circle devoted a section on the stablecoin “always” being 1:1 redeemable for US dollars.

Overall, 2022 was a challenging year for USDC, with allegations of insolvency and accusations of censorship being fired at the stablecoin.

However, in recapitulating its approach to the ecosystem and outlook ahead, Circle said it had kept its fundamental promise of dollar parity despite the industry-wide stress test of last year.

Furthermore, with the growing consensus in favor of “digital dollars,” the future looks bright for well-regulated and trusted offerings. According to the report:

,The promise of well-regulated digital dollars like USDC is fulfilling things that would not be possible with money if it remained in physical form and only traveled on largely-closed networks or analog rails.”

USDC is “always” redeemable

According to Circle, the company has redeemed $213 billion since its launch in 2018. This is possible thanks to the prudent management of USD assets backing the token.

On that, 80% of the asset reserves relate to 3-month US Treasuries.which are among the most price-stable and liquid assets in the world. At the same time, the remaining 20% ​​is held as cash across eight different US-regulated banks.

Additionally, Circle is regulated and licensed under US state money transmission licenses and as a money services business (MSB) with the US Treasury — meaning it follows know your customer
(KYC), anti-money laundering (AML), and financial terrorism regulations.

Users can be further assured by monthly attestations from the accounting firm Grant Thornton that the company has more dollar-denominated reserves than USDC tokens in circulation.

,We have created a robust, risk-intelligent operating environment by embedding proactive and holistic identification, assessment, mitigation, monitoring, and reporting of risks and controls within all our business and product lines, functions, and processes.

Circle controversies

In the wake of the Tornado Cash sanctions imposed by the US Treasury and Circle’s compliance with censorship mandates, USDC has suffered from reputational damage.

At the time, ShapeShift CEO Eric Voorhees recommended MakerDAO users convert USDC for another, more censorship resistant stablecoin. Likewise, Ryan Adams of the Bankless Podcast said the actions of the US Treasury were “the opening shot of big brother’s assault on crypto.”

In addition, as crypto contagion spread from the collapse of Luna, 3AC, Babel, and Celsius, rumors were circulating that Circle was also on the brink of collapse due to their purported exposure.

The rumors were quickly shut down following the release of the first usdc reserve asset report in July 2022.

Commenting on censorship and account blacklisting, Circle CEO Jeremy Allaire said the company is legally required to comply with requests from authorities investigating criminal activity.

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