Circle USDC should show some transparency instead of just talking about it. Just like its predecessor, Circle’s USDC platform started out with great intentions. A legitimate stablecoin provides a safe place for traders to store their money. USDC promised transparency and attestations, and they have provided monthly attestations for years, but not enough transparency.
In 2014 tether was introduced with an aim to solve problems for Bitcoin which it had with exchanges. The main problem was that exchanges were playing games with withdrawals. Tether could obtain legitimate banking for the bitcoin exchanges, and Bitcoin exchanges wouldn’t need to worry about banking anymore.
Available attestations of Circle’s USDC platform:
A report from 2018 shows that:
- USD Coin (“USDC”) tokens issued and outstanding 127,408,827 USDC
- US Dollars held in custody accounts $127,412.240.89
- As of the Report Date and Time, the issued and outstanding USDC tokens do not exceed the balance of the US Dollars held in custody accounts.
Hence, in 2018 USDC was true with its dollar 1:1 pegged stablecoin commitment.
This attestation does not provide information in respect to their reserves, it’s strictly US dollars held in the custody accounts.
NOTE: This attestation is not an audit
Reserve account report:
In its Reserve Account Report Circle internet financial Inc. asserts the following information:
- USD Coin (USDC tokens issued and outstanding 127,408,827 USDC
- US Doters held in custody accounts-$127,412.240.89
As of the Report Date and Time, the issued and outstanding USDC tokens do not exceed the balance of the US Dollar held in the custody account.
CRITERIA
- The USDC tokens are the amount of tokens issued and outstanding detected under contract :Oxa0b86991c6218636c1d1904a2eebr3006e043.
- US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions on behalf of the USDC holders.
Circle USDC backs out of transparency
In March of 2020, Circle USDC provided us with the February attestation. The attestation stated the following:
According to this report, USD is still 1:1 backing USDC in a bank account at US depository institutions. There are no red flags for us to start asking any questions to Circle Inc.
However, after March 2020, when Bitcoin suddenly fell 40–50% during the Coronavirus panic, Circle USDC added some new ambiguous language in its report. Now the report discloses some “Approved Investments” for backing our USDC.
It’s a pretty neat coincidence that they’ve changed their holdings right after a massive cryptocurrency market crash. It’s also a very neat coincidence that the issuance of USDC skyrockets over the next year with this language as well.
What are the approved investments? Surely it’s only US treasury bills and safe investments, right? The problem with that, if that was the case, they could just say Cash & Cash equivalents/Treasuries, like what Paxos is currently doing:
So clearly, “approved investments” is more than just treasuries and cash. We would like to know what they are. It is true that they may have legal rights to invest their funds in different assets. But as they claim their product “USDC” as dollar 1:1 pegged, they should be ethical about it. If they are not able to show their trust in people then there could be a disturbance in the market.
Everyone will like to know whether:
- Are cryptocurrencies part of the “approved investments” for USDC?
- Are bonds in crypto based companies (traders, exchanges, miners), “approved investments” for USDC?
