Fiat-based stablecoins are only as good as what is backing the value. As we saw with TerraUSD, a dollar-based algorithmic stablecoin, little was there except hope and mirrors.
Circle, the issuer of USDC – the second largest dollar-based stablecoin in circulation, posted an update yesterday on USDC reserves stating they are including “new levels of detail” in their monthly attestations.
Circle has worked with Grant Thornton for several years now to provide monthly reports on what is backing USDC. The goal is to have as many dollars, or dollar-based stable assets, as there are stablecoins. For the month of July, viewable here, Grant Thornton reports USDC in circulation of 54,488,837,404 and dollars held in custody accounts of $54,618,693,479 – or more than the number of stablecoins live and in the wild. The report is as of July 31st and issued this week. Circle notes that reserves consist of cash and US Treasuries. For the Treasuiries, Circle posts the securities own along with maturity dates for the month of June.
Circle recently started doing the same with its Euro-based stablecoin but the amount in circulation is tiny in comparison to USDC.
Circle also posts weekly updates outside of the Grant Thornton reviews.
Circle states:
“Our history of attestations underscores our commitment to providing USDC holders, the broader crypto community and the general public with open, timely reporting on how we minimize risk and maintain liquidity in the USDC reserve. As policy and regulatory requirements evolve and as better reporting opportunities arise, we intend to adjust our approach and continue to enhance transparency into our operations to give the market even more confidence.”
Circle is in the process of becoming a publicly traded firm in a SPAC deal. It is also seeking a national bank charter which, if approved, would become the first stablecoin issuer to do so while driving confidence in the firm.