Circle, a member of the Centre Consortium, announced yesterday that, with help of Coinbase, it will change the structure of the reserves backing the value of USD coin (USDC). Circle stated that it will recover its original reserve structure comprised of cash and cash equivalents (short duration U.S. Treasuries).
However, the full conversion of the reserves will be completed in September. This was revealed by Coinbases COO, Emilie Choi, in a Twitter thread. She also clarified that, while the reserve portfolio diversified, assets were always fully backed. She stated:
“USDC has always been fully backed by reserves equal to or greater than the USDC in circulation, giving users the ability to always redeem 1 USD Coin for US$1.00.”
Coinbase‘s Late ReactionChoi expanded on the subject and talked about how Coinbase was late to act and remove the statement that every USDC is backed by a dollar in a bank account. She stressed this was a mistake on Coinbase’s part, declaring:
“When Circle shared their May report about Usdc reserves in late July (which included a more diversified pool of investments for the first time) we should have moved faster to update statements like that on our website. That was a mistake and Coinbase takes ownership for that.”
Circle faced heavy criticism from competitors and people in the cryptosphere when it published its attestation for the month of July. The document showed that reserves were comprised of undetermined commercial papers, Yankee CDs, and corporate bonds, in addition to cash and cash equivalents.
Even with all this happening, USDC has grown immensely this year. The stablecoin now has a market cap of nearly $28 billion, solidifying its second-place rank in the stablecoin market. But Circle is still expanding its scope. On July 1, the company announced it had plans to launch USDC in ten more blockchains, launching on the Tron blockchain the same day.
