Circle, the company behind the USD Coin (USDC), announced it has transitioned USDC reserves to cash and short duration U.S. Treasuries. According to a press release published on 23 August, the changes to the stablecoin’s peg are set to be reflected in its September attestation.
Until July 2021, the company claimed that USDC was backed 1:1 with cash. However, in July, an attestation published by auditing company Grandt Thornton revealed that cash made up just over 60 percent of the stablecoin’s reserves. The other 40 percent was backed by various forms of debt securities and bonds.
The massive change in the stablecoin’s makeup is the company’s response to “engagement from USDC users, developers, and other stakeholders.” Centre, the consortium created by Circle and Coinbase to issue and manage USDC, said the move deepens its commitment to transparency and allows the company to explore new opportunities to collaborate with the community.
Since its inception, USDC’s reserves were bound by permissible investment rules under state money transmission regulations. Combined with Centre’s own reserve management standards, these rules provide consumer protection and ensure USDC keeps its 1:1 dollar peg.
“As industry and government work together on the appropriate future supervisory standards, Circle is committed to maintaining or exceeding those standards, driving innovation, and building reliable, trusted, secure, and compliant infrastructure for dollars on the internet,” said Jeremy Allaire, the Co-Founder and CEO of Circle.