Who creates and issues USDC?

USDC is created and issued by the Centre consortium, which is a partnership between Circle and Coinbase. Circle is a financial technology company that provides a range of services and products, including a peer-to-peer payment platform and a cryptocurrency trading platform. The company was founded in 2013 and is headquartered in Boston, Massachusetts.

In 2018, Circle received a BitLicense from the New York State Department of Financial Services, which allowed it to offer its services in the state of New York. In addition to its core payment and trading services, Circle is also the co-founder of the CENTRE consortium, which is a partnership with Coinbase to develop and promote the use of the USDC stablecoin.

The Centre Consortiurm (Circle & Coinbase).

Is USDC fully collateralized?

Yes, USDC is fully collateralized. All USDC tokens are backed by a corresponding amount of fiat currency held in reserve. This means that for every USDC token issued and circulating on the Ethereum network, there is an equivalent amount of USD sitting in escrowed accounts. These reserves are held at multiple FDIC-insured banks and audited regularly to ensure accurate token-to-dollar ratios.

USDC also uses some of the cash to buy short-dated treasury bills (3 month max duration) to help earn yield on their assets. You can see a full breakdown of the collateralization below.

USDC Reserve Breakdown.
USDC Reserve Breakdown.

Is USDC a regulated stablecoin?

Yes, USDC is a regulated stablecoin. The Centre consortium has entered into partnerships and agreements with regulatory authorities to ensure compliance with relevant laws and regulations. For example, Circle, which is one of the founding members of the Centre consortium, is a licensed money transmitter in the United States and is subject to regulatory oversight from the US government.

In addition, the Centre consortium has entered into an agreement with the US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. These partnerships and agreements help to provide oversight and assurance for USDC users and stakeholders.

What are the risks of USDC?

As with any financial product or investment, there are risks associated with using USDC. One of the key risks to consider is the fact that USDC is a digital asset and therefore is subject to the inherent risks associated with cryptocurrency and blockchain technology. This includes the potential for technical failures or security breaches that could result in the loss or theft of USDC.

Another risk to consider is the fact that USDC is a stablecoin, which means it is pegged to the value of a real-world asset, in this case the US dollar. While the peg is intended to provide stability and confidence in the value of USDC, there is always the possibility that the peg could break and the value of USDC could deviate from the value of the US dollar. This could happen if there are significant changes in the demand for USDC or if there are issues with the reserves of USDC.

USD Coin (USDC) by Circle & Coinbase.

Final Thoughts

USDC is a stablecoin that is backed by actual US dollars held in reserve by the issuer, which in this case is the Centre consortium. This is intended to provide confidence in the value of the token and to ensure that it maintains its peg to the US dollar. In addition, USDC is an ERC-20 compliant token built on the Ethereum blockchain, which means it adheres to a well-established and widely-used set of technical standards.

Overall, it is important to carefully consider the risks associated with using USDC and to only invest or use USDC if you are comfortable with these risks. As with any investment or financial product, it is always a good idea to consult with a financial professional or conduct your own research before making a decision.