USDC stablecoin USDT

USDC Stablecoin Issuer Becomes Bank to Compete with USDT

USDC stablecoin USDT

The USDC stablecoin giant Circle plans to become a “national digital currency bank”. Circle will operate under the supervision of the Federal Reserve, and various agencies run by the U.S. Treasury. The USDC stablecoin issuer will increase the oversight of its reserves to compete with the current leader Tether (USDT).

“We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more efficient, but also a safer, more resilient financial system,” writes Jeremy Allaire, Circle CEO.

Partnering with Coinbase, Circle manages $27.8 billion in USDC, now the second largest stablecoin by circulation behind Tether. Each USDC token is backed by cash and U.S. dollar-denominated assets such as U.S. Treasuries. Stablecoin issuers like Circle profit from the interest they earn on reserves.

Moving forward, Circle will publish information about the liquidity coverage of its stablecoin USDC under international banking regulation Basel III. Currently, Circle operates under state money transmission regulations, which are less stringent than national banks must follow.

Stablecoin War: USDC to Flip USDT?

Allaire expects the circulating value of USDC will grow to hundreds of billions of dollars in the next few years.

Last month, Circle announced its plans to become a public company via a merger with a SPAC. The deal should value the company at $4.5 billion. This May, Circle raised $440 million from investors including FTX, Fidelity, Digital Currency Group, among others.

Lately, stablecoin USDT issuer Tether has released an assurance report on the breakdown of Tether’s reserves. Per the report, Tether has a total backing of $62.7 billion. Of that, $30.8 billion comes from commercial paper and certificates of deposit. Only 10% of Tether’s backing comes from cash and bank deposits.

On the other hand, the U.S. SEC charges crypto exchange platform Poloniex for breaching securities trading regulations. Circle purchased Poloniex in 2018 for $400 million and spun it out in late 2019. Poloniex agrees to pay over $10 million to settle the charges.

Thanks for reading our article! If you found this article helpful, don’t forget to join the discussion on our social media channels: Facebook / Twitter / Instagram Telegram

The content of this webpage is not investment advice and does not constitute any offer or solicitation to offer or recommend any investment product. It is for general purposes only.