Circle, the issuer of the world’s second-largest stablecoin USDC, has announced plans to be 100% backed by cash and short-term US Treasuries by September.
USDC reserves will consist of cash and short-dated U.S. Treasury
Coinbase came under fire in July for its claim that each USDC was “backed by a dollar in a bank account.” But it appears the company is trying to make up for its mistake. In September, USDC reserves will consist of cash and short-dated U.S. Treasury, Choi pointed out in a Twitter thread Monday.
Digital payments company Circle, which partnered with Coinbase to develop USDC, revealed in July that the stablecoin’s reserves have consisted of commercial paper and corporate bonds since May. These assets are vulnerable to losses and less liquid than the US dollar, which could cause problems if a large wave of customers tried to exchange their USDC for fiat currency.
Circle has ambitious plans for the future
Circle has many ambitious plans. In July, it announced plans to go public through a special purpose acquisition corporation (SPAC), Concord Acquisition Corp. In a deal that would value Circle at $4.5 billion.
Circle also announced that it wants to become a “full-reserve national commercial bank” regulated by the U.S. Federal Reserve, U.S. Treasury Dept Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC).