On June 30, Circle provided a financial report according to which USDC reserves amounted to $55.7 billion. Of these, $42.12 billion were US Treasury bonds, and the remaining $13.58 billion were held in cash in regulated financial institutions.
USD Coin was launched in 2018 and has since proven itself well among stablecoins. If a year after the launch, the market capitalization was $468,394,318, today it is already $54,926,804,906, according to CoinMarketCap. This amount allows USDC to occupy the fourth place in the ratings of cryptocurrencies by market capitalization today.
As we wrote earlier, in a crisis it is important to talk about the number and components of your reserves. According to Circle, the publication of a report on the reserves of a stable coin is aimed at increasing the trust of the community and the desire for transparency of work.
In his message on the official website of Circle, finance director Jeremy Fox-Green, drew attention to the fact that this report is the first, it reflects the breakdown of reserves and the list of reserve keepers. According to his statements, the company plans to make this kind of report monthly and add to it information about the amounts owned by the custodians. Note that earlier, following their confidence-building plan, Circle began publishing a weekly report on the creation or destruction of the USDC stablecoin. According to the report, cash intended for reservation is stored in eight different banks.
It is worth noting that Jeremy Fox-Green pointed out that the reserves are cash and bonds, and also comply with the requirements of US law.
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.
However, despite the efforts of the company’s management, the community did not take this report seriously. Under Circle’s Twitter post, users criticized the company’s actions, pointing out that using their own data without the assessment of independent experts does not constitute as a real report.
Indeed, audited reports are very rare in the cryptocurrency world. There are only a few reports where audit firms from Big4 are planning or being engaged in an audit of digital asset projects and stable coins in particular. The most recent was the information about an agreement between KPMG and British Pound backed stable coin issuer, Blackfridge. Auditing is an effective mechanism for supervision of financial reporting, however the risk profile of crypto projects, individually and systemically still does not allow application of it.
Nevertheless, we observe here attempts of stablecoin issuers to improve transparency of their operations, which can evolve into development into industry specific tools and mechanisms.