Circle's comeback is in full swing. In a strategy that combines innovation, regulatory compliance and high liquidity, the crypto FinTech has recently launched USDC on Arbitrium, EUROC on Avalanche, and introduced the CCTP bridge protocol to the crypto community.
EUROC on Avalanche
In March this year, Circle announced the release of its other stablecoin cryptocurrency - the Euro Coin (EUROC), on Avalanche.
With a market capitalization of $52.5 million, EUROC is the first stablecoin pegged to the euro that is fully backed by reserves denominated in euro. Circle first launched it on Ethereum a year ago, aiming to democratize access to the world's second most important currency.
The release on Avalanche is the first in a series of multi-chain expansions planned for the currency. Joao Reginatto, VP of Product at Circle, said,
“By launching Euro Coin on Avalanche, a platform recognized for its speed and efficiency, we aim to offer developers and users the advantage of near-instantaneous, cost-effective financial transactions, opening up new avenues for payments, remittances, and round-the-clock foreign exchange.”
USDC Native Bridge, CCTP, Between Ethereum and Avalanche
Shortly after expanding its euro-pegged stablecoin on Avalanche, the company also launched the Cross-Chain Transfer Protocol (CCTP) for USDC, its native bridge connecting Ethereum and Avalanche.
CCTP works like other bridges: after burning the USDC on the source chain, a Circle attestation of the burn event triggers USDC to be minted on the destination chain and sent to the recipient address. Besides unifying the USDC markets, the bridge can also be used for cheaper transfer of value, Joao Reginatto elaborates:
“Cross-Chain Transfer Protocol ultimately enables USDC to function as a universal dollar liquidity layer across ecosystems, providing the most capital efficient way to transport value across the crypto ecosystem.”
Last year, six of the biggest crypto hacks happened via bridges, which makes users reluctant to rely on third-party partners to send assets across chains. However, Reginatto explained, “Users can trust that they are always transacting with a highly liquid, safe, and fungible asset in native USDC.”
USDC and CCTP on Arbitrum
Institutional users will benefit most from the CCTP as bridge hackers tend to target more significant amounts. Possibly due to most big investors having a position in Ethereum and using its scaling solutions, Circle next opted to roll out CCTP on Arbitrium.
To do so, it first launched USDC on the L2 solution.
Until now, Arbitrium had a bridged version of USDC originating from Ethereum. This version will be phased out as the native token is progressively adopted. The launch took place on June 8th, while the CCTP protocol will follow shortly after, on June 27th.
This was the second expansion of USDC in 2023. In March, the stablecoin became the first stablecoin to be accessed natively in Cosmos in a partnership with crypto startup Noble.
Circle in Perspective
Although Tether (USDT) has a larger market cap, USDC enjoys more legal certainty as Circle is a U.S. company regulated as a licensed money transmitter by the U.S. Financial Crimes Enforcement Network (FinCEN). Launched in 2018 in a consortium with crypto exchange Coinbase (NASDAQ-listed since 2021), backed solely by T-bills and highly liquid deposits in top U.S. banks, USDC was aiming to become the 'gilt-edged' product in the stablecoin niche.
Nevertheless, the crypto bear market took a toll on USDC, eroding almost half its market capitalization, from $54 billion in 2022 to around $28.8 billion today. When Silicon Valley Bank collapsed in March, Circle reported a $3.3 billion exposure to the bank, causing USDC to briefly lose its peg to the dollar, with its price falling as low as 87 cents.
Endurance is critical in the cryptocurrency market, and it looks like Circle has what it takes to make it. The recent hardships didn’t put Circle off its plan for new launches. Furthermore, with the introduction of CCTP, the FinTech company has raised the bar and entered a new market of cross-chain bridges. Now Observers will watch not only Circle's new coins and reserves but also CCTP's performance.