President and chief operating officer at Coinbase, Emilie Choi, has posted an update on the reserves of the world’s second-largest stablecoin, USDC.
In a tweet on Aug 22, Choi stated that starting in September 2021, Coinbase’s USDC reserves will be held in cash and short-duration U.S. government treasuries.
She added that the stablecoin has “always been fully backed by reserves equal to or greater than the USDC in circulation,” giving users the ability to always redeem one USD Coin for one dollar.
At the time of press, there was 27.3 billion USDC in circulation, a slight dip from its peak of 28 billion earlier this month. So far this year, USDC supply has grown 600%, outperforming rival Tether by a factor of three.
More conservative USDC investments
In May, Circle reserves backing the stablecoin expanded beyond cash and cash equivalents. The company provided a more detailed breakdown of reserve composition in July, adding clarity and insight into the funds backing USDC.
In this latest announcement, Circle confirmed that it should have been quicker in updating customers regarding its reserves:
“Mindful of community sentiment, our commitment to trust and transparency, and an evolving regulatory landscape, Circle, with the support of Centre and Coinbase, has announced that it will now hold the USDC reserve entirely in cash and short duration US Treasuries.”
The Coinbase COO confirmed that these changes in the investment portfolio for USDC reserves that began in May 2021 will not extend past September. She added that Coinbase will ensure USDC investments revert back to a “more conservative investment profile” by the end of next month.
The announcement stated that Circle aims to expand its multi-chain versions of USDC beyond the five blockchains it’s currently on. It added that it’s also in the process of developing new non-dollar fiat-backed digital currencies in countries on three continents.
Still awaiting Tether audit
Circle’s main rival, Tether, has more than twice the amount of stablecoins in circulation. According to its transparency report, there are 65 billion USDT circulating, the majority of which, are on the TRON network.
Tether’s growth has been lagging behind Circle’s, however, with a 210% expansion in supply so far this year.
In July, the firm’s general counsel Stuart Hoegner promised that an audit would be coming “in months, not years.” Tether’s reserves are heavily dollar-weighted but also include cash equivalents, bonds, secured loans, crypto assets, and other investments according to Hoegner.
With around $44 billion worth being minted this year alone, concerns have grown about their backing, and a full audit is eagerly awaited by users and regulators alike.
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