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.”
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
Editors’ Picks
![Ethereum has lost its “ultra” sound money status, faces key rectangle resistance hurdle](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Ethereum/Ethereum_Coins_31_03_XtraSmall.jpg)
Ethereum has lost its “ultra” sound money status, faces key rectangle resistance hurdle
Ethereum is up 0.5% on Thursday following a recent analysis showing that the top altcoin lost its "ultra" sound money narrative. Meanwhile, ETH ETFs recorded net inflows for the first time after nine days of consecutive outflows.
![Solana bears dominate market as SunPump has potentially led to less demand for SOL](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Solana/Solana_Crypto_31_XtraSmall.jpg)
Solana bears dominate market as SunPump has potentially led to less demand for SOL
Solana is down 2.5% on Thursday following bearish signals across its funding rate and total fees captured. SOL's weak performance could also be linked to the declining traction seen in its meme coin generation platform Pump.fun.
![AI tokens see narrow gains as Wall Street banks raise price targets on NVDA](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/PEPE/PEPE_coin_2_XtraSmall.jpg)
AI tokens see narrow gains as Wall Street banks raise price targets on NVDA
AI tokens NEAR, ICP, RENDER and TAO briefly traded in the green on Thursday following Wall Street banks' positivity toward Nvidia's earnings report. While a correction followed, these tokens could rally if NVDA meets expectations.
![XRP back above $0.57 even as Ripple traders take $8 million in profits](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/cryptos_XtraSmall.jpg)
XRP back above $0.57 even as Ripple traders take $8 million in profits
Ripple (XRP) traders have consistently taken profits on their holdings in the last two weeks, per Santiment data. Once again, traders have grabbed $8.36 million in profit so far on Thursday. Typically, profit-taking negatively influences the asset as it increases the selling pressure.
![Bitcoin: Will BTC continue its ongoing decline?](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoin_5_XtraSmall.jpg)
Bitcoin: Will BTC continue its ongoing decline?
Bitcoin (BTC) trades above $59,000 on Friday, but it has lost 7.5% this week so far after being rejected around the daily resistance of $65,000. The decline is supported by lower demand from the US spot Bitcoin ETFs, which registered a net outflow of $103.8 million, falling Bitcoin's Coinbase Premium Index, and a spike in Network Realized Profit/Loss. However, some investors seem to be taking the chance to buy BTC amid this price dip, as shown by the Exchange Netflow data.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.