Circle reveals a breakdown of USDC reserves for first time in 4 years

abdelaziz Fathi

Boston-based stablecoin issuer Circle, for the first time since its launch in 2018, has revealed a breakdown of its reserves, as well as a complete list of USDC reserve custodians.

The breakdown, dated as of June 30, 2022, shows that Circle held 100% of its $55.7 billion reserves in cash and cash equivalents. Specifically, short-term United States Treasuries formed the majority of its cash equivalents category with $42.12 billion or a 75 percent share. The company also reported $13.58 billion in cash held at regulated financial institutions in the US.

“The USDC reserve is held solely in cash and 3-month U.S. Treasuries, held in segregated accounts for the benefit of USDC holders, and is entirely separate from Circle’s operations. The USDC reserve is subject to all the same protections under U.S. state and federal law as afforded to other large scale payments innovators entrusted by millions of customers with tens of billions of dollars of customer assets,” the statement reads.

Since launching its US dollar-pegged USDC in 2018, Circle has published third-party monthly attestations to confirm that it does possess sufficient capital to back each individual token on a 1:1 basis.

The attestation of conformity, issued by the accounting firm Grant Thornton LLP, often demonstrates that Circle held fiat reserves that are slightly above the number of issued and outstanding USDC tokens in circulation.

Founded in Chicago in 1924, Grant Thornton is the US arm of UK-based Grant Thornton International Ltd, a top five professional service firm.

Onboarding a major accounting firm, which can be held accountable by third parties for financial information, to engage in an audit of a crypto token was also a notable success for Circle’s initiative. The developing nature of the cryptocurrency industry, combined with the lack of regulatory oversight, makes the potential risk associated with a comprehensive audit of USDCs or any other crypto asset too high for accountancy firms.

Circle seeks to reassure investors that its cryptocurrency is backed by U.S. dollars after Tether’s major stablecoin has been dogged by speculation that it holds insufficient capital to support its market cap of USDT.

Circle plans to roll out a euro-pegged stablecoin, providing a liquid and stable means of obtaining exposure to the single European currency. Similar to USDC, EUROC is fiat-collateralized with each stablecoin unit backed by a corresponding unit of Euro. Specifically, Silvergate Bank will act as the initial custodian for Euro Coin to ensure it’s always 100% backed by fiat money held in euro-denominated banking accounts.

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