Circle releases a report on the state of the USDC economy
Circle has released its first report on the state of the USDC economy, titled “The State of the USDC Economy – Welcome to the Utility Value of Digital Currency,” celebrating the company’s 10th anniversary and five years since the launch of the stablecoin.
USDC Economy Status
As part of its celebration of the 10th anniversary and five years of its stablecoin, Circle, the issuer of the US dollar coin (USDC), has released its first annual State of the USDC Economy report, detailing the project’s significant milestones over the years, the growth potential of its digital assets and more.
While financial regulators around the world have tightened the screws on private stablecoins due to bad examples set by disastrous projects like the failed Do Kwon algorithmic stablecoin Terra UST last year, Circle claims to follow several strict processes to ensure its stablecoins are always maintained. At par with their base fiat currencies.
As noted in the 28-page document, Circle claims to have recovered more than $213 billion USDC as of 2022.
The company says the sustainability of its flagship stablecoin product and its steady parity with the US dollar over the years is due to several key principles instilled by Circle, including establishing a flexible, global system for risk and treasury management and enhancing transparency through independent oversight.
Circle says about 80% of USDC reserves are held in “stable-price and liquid” 3-month US Treasury notes, which it plans to move into a BlackRock-managed Circle Reserve Fund by the end of this month. Bank of New York Mellon is the treasurer.
Circle claims to hold approximately 20% of its diversified cash reserves among eight regulated financial institutions in the United States, including the Circle Impact program that is dedicated to allocating a share of reserves to “underrepresented community banks and minority depository institutions (MDIs).
Regulatory compliance and transparency
While the current uncertainty in the crypto market has caused some audit firms to stop servicing Web3 businesses, Circle explained that Grant Thornton has fully audited its operations and USDC reserves. However, Deloitte will act as its audit partner in the future.
“We have been audited by Grant Thornton, and those audits cover the USDC reserve. The 2019, 2020, and 2021 audits (according to US public company standards) have been publicly filed with the US Securities and Exchange Commission (SEC). Deloitte to audit Circle reserves and USDC.
We are committed to continually enhancing our disclosure regarding USDC reserves. The Circle Reserve Fund, a government-registered 2a-7 money market fund, wholly owned by Circle, provides daily disclosure of the Fund’s holdings of US Treasury securities consisting of USDC reserves, subject to the independent oversight of BlackRock and the Fund Board of Directors. “
In terms of regulatory compliance, Circle takes its anti-money laundering (AML), counter-financing of terrorism (CFT), and sanctions obligations very seriously, as evidenced by the company’s recent restrictions on transferring funds from sanctioned Tornado Cash addresses.
The company also highlighted some of the significant steps it has taken so far to advance financial crime compliance and preserve individual privacy, including the launch in February 2022 of Travel Rule Universal Solution Technology (TRUST), a platform that enables cryptocurrency exchanges to comply with the platform’s travel rules. Financial Action Task Force (FATF) while protecting the security and privacy of customers.
Circle says its USDC trading has grown from $0 to $45 billion in four years with the stablecoin now available on eight major chains, including ethereum, solana, and polygon. The company attributes this success to its collaborations with developers and innovators committed to redefining money, payments, and finance with digital dollars such as USDC.
Going forward, Circle says it plans to empower millions of developers to reconnect the global financial system. As part of this initiative, the company will provide $10,000 USDC grants to ten students studying Web3 Solution Development.
Circle has also joined forces with the Crypto and Blockchain Economics Research Forum (CBER) to launch the Circle Insight Award, recognizing outstanding academic papers that provide solutions to real-world problems using blockchain technology.
Awards range from $5,000 to $10,000 per recipient and will be announced during CBER’s annual conference later in May 2023.