On Tuesday, the fintech company Circle reveals that the majority of their USDC stablecoin is backed by U.S. Dollars.
According to a breakdown of USDC reserves in an attestation report that dates back to mid-July, 61% of USDC is backed by cash and cash equivalents. Cash includes deposits at banks and Government Obligation Money Market Funds. A cash equivalent is, for example, a security with an original maturity less than or equal to 90 days following generally accepted accounting principles.
Yankee Certificates of Deposit – which are CDs issued by non-U.S. banks – account for another 13%, U.S. Treasuries back 12%, commercial paper accounts for 9%, and municipal and corporate bonds compromise the spare tokens.
Tether also published a similar report in May
The more controversial competitor of Circle Tether also published a similar report in May. The report showed that only 2.9% of Tether’s reserve was backed by actual cash. Just like Tether Circle uses commercial paper as well. However, commercial paper accounts for a much larger share of Tether’s reserves than Circle’s. Tether is still the most used stable coin and takes number 3 in the market cap according to Coingecko. However, USDC has been becoming more popular and takes the spot of number 6 right now.
In a blog post, Circle CEO Jeremy Allaire states that the new attestation is part of the company’s goal to become more transparent before the company goes public.
The company plans to go public later this year in a merger with a special purpose acquisition company that would value Circle at $4.5 billion.