USD Coin (USDC), Circle’s dollar-pegged stablecoin, seemingly lost one of its biggest competitive advantages over its main rival, Tether (USDT). 

Major crypto exchange Coinbase made an important change on the USD Coin page on its website following an audit that revealed that not all of USDC’s reserves were held in cash. This ran contrary to the previous statement that “each USDC is backed by one U.S. dollar held in a bank account.”

Coinbase visitors are now greeted with a statement that says USDC is “backed by fully reserved assets” when they enter the USD Coin webpage. This new claim states:

“Each USDC is backed by one dollar or asset with equivalent fair value, which is held in accounts with US regulated financial institutions.”

Chart

Coinbase changed the promotional material for USDC. Source: Bloomberg

USD Coin stands as the eighth-largest cryptocurrency with a total market capitalization of over $28 billion. USDC is also the second-largest stablecoin after Tether, which has almost $63 billion in total assets, according to its latest Consolidated Reserves Report.

Since its inception, USDC has soared as a stablecoin fully backed by United States dollars. On the other hand, Tether has found itself in hot water with regulators on more than one occasion due to undisclosed commercial paper accounting for almost half of USDT’s total reserves.

However, an audit by multi-national tax advisory firm Grant Horton showed that 61% of USDC’s reserves were held in cash and cash equivalents, while 9% of the reserves were held in commercial paper. The audit report defines cash as deposits at banks and Government Obligation Money Market Funds, while cash equivalents are defined as securities with an original maturity less than or equal to 90 days.

The report revealed the USDC reserves include Yankee certificates of deposit and U.S. Treasuries and certainly are not “fully backed by U.S. dollar held in a bank account.” According to Bloomberg, the wording for the USD Coin on the website was changed the day the mainstream media contacted Coinbase about the report and related marketing material.

Coinbase spokesperson Andrew Schmitt reiterated to reporters that each USDC is backed by $1 or asset with equivalent fair value:

“Users can always redeem 1 USD Coin for US$1.00. We have added additional detail to our website for customers to understand more about USDC reserves.”

Circle, the company that oversees USDC in partnership with Coinbase under The Centre Consortium, recently announced its plans to become a full-reserve national digital currency bank in the United States. Circle CEO Jeremy Allaire said the company is willing to operate under regulators’ supervision and risk management requirements.

As part of the announcement, he said that USDC will grow to “hundreds of billions of dollars in circulation” continuing to support high-trust economic activity and will become a popular tool in financial services and internet commerce applications.

Coinbase did not immediately respond to Cointelegraph’s request for comment.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Recommended content


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP