Aug 24, 2021 17:00:00

The management organization announces that the reserve of the virtual currency 'USD Coin' corresponding to the US dollar 1: 1 will be only cash and government bonds

Virtual is a currency company Circle and Coinbase of major exchanges was issued in 2018

stable coin is ' USD Coin is'. Centre, the governing body of USD Coin, has announced that it will hold USD Coin reserves solely in cash and US Treasuries.

USDC Reserves Composition
https://www.centre.io/blog/usdc-reserves-composition

Crypto: USD Coin (USDC) stablecoin to change reserves composition
https://www.cnbc.com/2021/08/23/crypto-usdc-stablecoin-to-change-reserves-composition.html

Circle's New Reserve Details Show Reservations | PYMNTS.com
https://www.pymnts.com/cryptocurrency/2021/circle-squares-transparency-on-dollar-reserves/

Stablecoin is a virtual currency with a relatively stable price. USD Coin is characterized by fixing the exchange ratio to 1 USDC = 1 dollar (about 110 yen) by using the legal tender called US dollar as collateral.

Unlike Bitcoin and Ethereum, stablecoin does not fluctuate significantly in value, so stable transactions and operations are possible. In addition, assets can be temporarily evacuated when the cryptocurrency market is severely turbulent and is about to crash, so it can be expected to minimize losses.

However, the reliability of stablecoin's value stability changes depending on the collateral, so the breakdown of the reserve as collateral is very important. For example, Tether , which boasts the largest circulation of US dollar stablecoins, holds only 2.9% of its collateral reserve in cash and is mostly unsecured promissory notes. It is a commercial paper .

The fact that tether does not have the same amount of US dollars as collateral means that the number of tethers in circulation does not have to correspond to the dollar in theory, and the possibility that the price stability of tether will collapse is an investor. Is of great concern.

Meanwhile, USD Coin was backed by US investment bank Goldman Sachs at the time of issuance and was expected to hold abundant US dollars. In addition, Circle is registered with the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department, and USD Coin is highly reliable as a stablecoin because it is licensed for cryptocurrency business from regulators along with Coinbase. It was said that.

However, in July 2021, Grant Thornton International , who audits USD Coin, said in a (PDF file) report that cash was 61% of USD Coin's reserves and the rest consisted of receivables. Revealed.

In response, Center stated in its official blog that 'Circle reserves were shown to be cash and cash equivalents in May 2021 and a more detailed breakdown was presented in July of the same year. Given community sentiment, commitment to credibility and transparency, and evolving regulatory conditions, Circle, with the support of Center and Coinbase, will hold all USD Coin reserves in cash and short-term US bonds. Was announced. '

The Federal Reserve said, 'Stablecoin is a potential threat to the stability of the financial market and should be regulated,' said Jerome Powell, chairman of the Federal Reserve Board. If we can prepare digital currencies by the Fed, we will not need virtual currencies such as USD Coin and Tether. '