As the world continues to see the advantages of cryptocurrency and blockchain technology, more and more users are choosing USD Coin (USDC) as their digital dollar currency, to transact, to store value, and as a unit of account. USDC is the world's leading regulated stablecoin, and the trust the market places in it can be traced directly to the way in which it was created and how it operates today. USDC was developed to be an open-source project that works within US money transmission laws and regulations, uses established banks and auditors, and runs on blockchain technology via smart contracts. The goal is true financial and operational transparency.
Investment of USDC reserves follows the permissible investment rules under state money transmission regulations and is also guided, more conservatively, by Centre’s Reserve Management Policy (an updated version of which is soon to be published on our website. Centre requires that Centre-approved stablecoins be issued by regulated and licensed financial institutions that maintain, at a minimum, full reserves of assets denominated in instruments of the equivalent fiat currency, held in segregated accounts for the benefit of USDC holders.
Circle reserves expanded beyond cash and cash equivalents in May, 2021, and the company provided a more detailed breakdown of reserve composition in July, adding clarity and insight into the funds backing USDC. Mindful of community sentiment, our commitment to trust and transparency, and an evolving regulatory landscape, Circle, with the support of Centre and Coinbase, has announced that it will now hold the USDC reserve entirely in cash and short duration US Treasuries. These changes are being implemented expeditiously and will be reflected in future attestations by Grant Thornton.
Centre is responding to engagement from USDC users, developers and other stakeholders by deepening its commitment to transparency and by exploring new opportunities to collaborate with the community. By later this year we expect to announce several new opportunities for members to become more formally involved with Centre’s standards and governance activities.
Centre's standards have provided assurance and trust to the ecosystem contributing to the dramatic growth of USDC over the past year. USDC is actively employed on major exchanges and in defi protocols and is increasingly being used as a form of payment across a growing number of applications. The goal of multi-chain and multi-issuer Centre standard stablecoins is becoming realized, with USDC live on five blockchains and soon to come on several more, and with Centre's standards and processes now being used to develop new non-dollar fiat backed digital currencies in countries on three continents, even further expanding the ability for users to make digital transactions with the highest degree of transparency and trust.
