The market capitalization of the world’s largest stablecoin received a boost despite facing regulatory threats in the United States.
Crypto Company Circle Seeks To Become Global Digital Currency Bank
The company behind the increasingly popular USDC stablecoin dreams big. Circle wants to leverage its know-how and good reputation to become “a global digital currency bank.” That means it’s also looking into becoming a digital currency bank in the US. Their plan’s announcement focused on that region of the planet, but the wording makes it clear that they’re ultimately looking for worldwide domination.
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According to Coindesk, “this would be an industry first, with a scope far beyond the OCC banking charter already conditionally issued to Anchorage, Paxos and other crypto-native financial services firms.” The company’s aim is to provide “frictionless, instant and nearly free payments that combined fiat reserve currencies with open, permissionless blockchains, and eventually building on these open networks to support new forms of capital formation and intermediation.”
It’s the project ready for prime time or in its infancy? Did they file the documents already? Will they be able to pull this off? Keep reading for extra clues and info.
USDC price chart for 08/10/2021 on Bitbay | Source: USDC/USD on TradingView.com
Circle Played Nice With Governments From The Get-Go
The USDC stablecoin is issued by CENTRE, a joint venture between Circle and Coinbase. Their aim is “to conform with stringent U.S. money transmission supervisory and regulatory standards.” In contrast Tether, their main competition, is famous for the probe that the US Department Of Justice launched against them.
The main point of contention against Tether is the reserves they hold to back up their USDT. Attacking their competition’s weak spot, Circle claims, “Establishing national regulatory standards for dollar digital currencies is crucial to enabling the potential of digital currencies in the real economy, including standards for reserve management and composition.”
Since regulatory compliance is their forte, Circle spends half of their announcement praising their own transparency and USDC’s liquidity even “in times of intense demand to redeem USDC”. To prove that, they provide an independent accountant report that highlights the “composition of USDC reserves, including the credit quality of the underlying assets.”
Related Reading | Tether (USDT) To Face Do or Die Situation in 2021: Messari Report
Why does all of that have to do with their plans to become a national digital currency bank? It proves that they’re in tune with the US Government.
Now, with USDC at more than $27.5 billion in circulation, and building on our long-standing commitment to trust, transparency and accountability in the dollar-denominated reserves backing USDC, we are setting out to become a U.S. Federally-chartered national commercial bank.
Circle intends to become a full-reserve national commercial bank, operating under the supervision and risk management requirements of the Federal Reserve, U.S. Treasury, OCC, and the FDIC.
Other Big Plans For The Crypto Company
Recently, Circle announced its intention to go public before the end of the year. According to Coindesk, the company “partnered with a special purpose acquisition company (SPAC) to go public later this year. The deal valued Circle at $4.5 billion.” Also, their USDC project will soon go live in multiple blockchains. As NewsBTC informed:
It will soon be available in, “Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron.” That will bring the total to 14; since USDC is already functional in Ethereum, Algorand, Stellar, and Solana.
In related news, NewsBTC recently highlighted a Messari report that shows USDC is the most used stablecoin in DeFi.
From what Ryan Watkins, a credible researcher, predicted, the stablecoin share for Tether on Ethereum could dip below 50%. In addition, Watkins revealed that more than half of USDC’s total supply is now in smart contracts.
The equivalent value for this USD Coin supply is about $12.5 billion. According to Messari, CoinMetrics data estimates show that USDC’s stablecoin supply is over 40% on Ethereum.
However, none of that guarantees that their plans to become a global digital currency bank will come true. Keep the NewsBTC tab open for further information on this developing story.
Featured Image by Chaitanya Tvs on Unsplash – Charts by TradingView
Commercial Paper Reserves Of Tether Under Heavy Regulatory Scrutiny
Tether has been facing a lot of pressure from regulatory authorities. Now, the attention of the watchdogs has shifted to its commercial paper reserve. As a result, this week has been very hot for the company. The regulators focus their attention on what makes up the Tether reserves.
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A report disclosed that Tether’s Michael Hsu said that the US regulators focus their attention on the paper to know if every Tether Token is actually backed by $1 as the company claims.
US Regulators Scrutinize Tether
From what we learned, the regulators investigating Tether are led by Janet Yellen, the US Treasury Secretary. Before now, Yellen has held some meetings about the possible risks of stablecoins.
Now, the ” President’s Working Group on Financial Market” aims to know if Tether really holds large amounts of commercial papers as it claims. Commercial papers usually represent debt instruments that companies issue to investors for short-term funds.
However, the Working Group does not believe the claims as it compares it to a mutual fund that can lose its investors in one day. Presently, the total USDT in circulation is 62 billion. So, there seems to be a legitimate cause for alarm.
The crypto market is back in the bullish mode as BTC climbs above the $40k mark | Source: Crypto Total Market Cap on TradingView.com
Last two months, Tether had revealed the composition of its total reserves. According to the stablecoin, it had more instruments that were not just cash or cash equivalents, such as bonds, secured loans, bitcoin, and a larger portion comprising of commercial papers.
Related Reading | Tether To Conduct An Audit To Negate Claims Concerning Transparency
While talking with sources, Stuart Hoegner, the Tether general counsel, revealed that the company is planning a thorough audit in some months to come. Let’s recall that Tether hasn’t carried out such audits before now, and the announcement helped a lot of investors to breathe easier.
However, on July 19, Yellen was heard asking lawmakers to establish rules that will guide stablecoins in the financial market.
More Calls on Crypto regulations
After calling for regulations on stablecoins, Yellen received a letter nine days later from Senator Elizabeth Warren asking her to push for greater regulation for the cryptocurrency industry as a whole.
During a hearing of the “Senate Banking Committee,” Warren also stated her negative position about the crypto industry. According to her, it was better to hand over the financial systems to giants banks than some nameless and faceless, shadowy miners and super-coders.
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However, during the hearing, an Anderson Kill Law partner, Preston Byrne, stated that the most frightening of all is that Elizabeth Warren is in control of the financial system. Elizabeth is a democrat who has been serving as a United States Senator since 2013.
Featured image from Pixabay, chart from TradingView.com
Regulators scrutinizing Tether’s commercial paper reserves: Comptroller of the Currency
Tether is still under regulatory pressure with eyes now cast towards its commercial paper reserves.
Market Wrap: Possible Trend Reversal as Bitcoin Spikes Past $40K
The strong bounce in bitcoin over the weekend occurred as shorts covered positions.
USDT Maintains Dollar Peg as Traders Shrug Off DOJ Tether Probe Report
Unlike past scares, Monday’s report of a Department of Justice investigation hasn’t shaken traders’ faith in the stablecoin.
Tether To Conduct An Audit To Negate Claims Concerning Transparency
The Tether general counsel has declared an official audit in few months. USDT is a popular stablecoin occupying the third position in global digital assets. As it’s on blockchain that cybersecurity experts deem unhackable, the majority today trusts its security.
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However, many people in the crypto community have been waiting for a financial audit of the stablecoin. Now, it seems that the ongoing regulatory issues in the crypto industry have galvanized the Tether team into action. As a result, they’re declaring that an audit will take place soon.
Tether Executives Grants Media Interview
Another rare incident is an interview in which the Tether CTO Paolo Arduino and Stu Hoegner, the general counsel, participated on CNBC.
During the interview, the hosts asked the duo some questions about USDT’s transparency and backing. In response, the general counsel stated that the team is working to be the first in their sector to get financial audits.
The crypto market has just turned bullish as the USDT trades in the green zone | Source: USDTUSD on TradingView.com
He also mentioned that the audits would come in months and not years. As for backing, he stated that the stablecoin is backed with reserves.
But Hoegner mentioned that some of the reserves are not US dollars. But the reserves are more US dollars plus other cash equivalents, secured loans, crypto assets, bonds, and others.
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However, in the Transparency report which Tether published, the market cap for USDT stands at $62 billion. Even though the number has increased by 195% since 2021 started, it is still behind competitors such as BUSD and USDC.
When Circle released a reserve report yesterday, July 21, it showed that 61% of the USDC reserves are cash & cash equivalent. The remaining 39% are in treasuries, bonds, and commercial paper accounts.
Taxes Decides To Attack
Paxos is a rival to Tether and recently attacked the stablecoin and Circle through its blog post on July 21, 2021. In the post, Paxos claims that the duo is not operating under financial regulators. In his words, both USDC and Tether are simply Stablecoins in name only.
Paxos disclosed that its stablecoin reserves are a combination of cash or cash equivalents to support its claims.
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But in May, Tether disclosed the total backing that USDT has, which were cash 3.87%, fiduciary deposits 24.20%, treasury bills 2.94%, cash equivalents, commercial papers, which make up 65.39% plus others. This action was because the US lawmakers are closely scrutinizing its operations.
Also, Tether started submitting reports about its reserves after it reached a settlement agreement with the NY Attorney General’s Office 5 months ago. The firm has continued to send these reports since then.
Featured image from Pexels, chart from TradingView.com
Tether promises an audit in ‘months’ as Paxos claims USDT is not a real stablecoin
Tether’s general counsel said a full audit is coming in months.
Auditors reveal USDC backing as Jim Cramer sounds alarm over Tether’s mad money
Grant Horton has conducted an audit on USDC’s reserves and Jim Cramer has questioned what’s going on with Tether’s commercial paper reserves.
As Bitcoin Drops Below $30k, Stablecoins Surpass $100 Billion In Total Supply
Bitcoin has dropped below the $30k mark, while stablecoins go strong as they surpass over $100 billion in total supply.
Total Stablecoin Supply Is Now More Than $100 Billion
According to a report by Arcane Research, the total stablecoin supply has now surpassed the $100 billion mark, while Tether’s dominance is declining.
Here is a chart that shows the trend in the total supply and dominance of some popular coins:
The stablecoins total supply as reached a new height
There are a few interesting features in the graph. The total supply of these coins used to be only $11 billion in July of 2020, and now it seems to have risen $96 billion in the past 1 year, reaching about $107 billion today.
Tether (USDT) dominated the stablecoins market back then, accounting for 83% of the total market. But today it has declined to just 58% of the supply.
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On the other hand, the second-placed coin, USDC, has seen sharp growth, and it now accounts for 25% of the market. Nonetheless, Tether is still the most dominant crypto in this sector.
The company behind USDC, Circle, is currently in the process of going public with the help of a SPAC. In an investor presentation, the company revealed that they project USDC to rise to $83 billion by the end of 2022, and $194 billion by the end of 2023.
Binance USD (BUSD) places third after having overtaken DAI a few months back. BUSD has also seen some great growth over the past year.
While BTC continues its downtrend and dips below the $30k mark, 2 stablecoins have made their way into the top performers for the past week.
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These two coins are Fei Protocol (up 0.82% in the last 7 days) and TerraUSD (up 0.08% in the past week). Here is a chart that shows how the the popular cryptocurrencies by market cap have performed in the same period:
All the big coins seem to be down
As you can see in the above chart, Bitcoin and Ethereum seem to be deep in the red.
Bitcoin Price
At the time of writing, BTC’s price floats around $29.7k, down 9% in the past 7 days. Over the last month, the coin has dropped 14% in value.
Below is a chart showing the trend in Bitcoin’s price over the past 6 months:
BTC continues its downtrend | Source: BTCUSD on TradingView
Bitcoin has finally dropped out of the $30k to $35k range that the coin has been stuck in for the past few weeks. It could mean more price action could be coming following a very stale market with minimal volatility.
Featured image from Pexels.com, charts from Arcane Research, TradingView.com
Treasury secretary Yellen urges lawmakers to quickly introduce stablecoin guidelines
The President’s Working Group on Financial Markets expects to deliver regulatory recommendations for stablecoins in the coming months.
Stablecoin growth could affect credit markets, rating agency warns
Fitch notes potential asset contagion risks posed by stablecoins could lead to tighter regulations for the industry.
Messari Report: USDC Is The Most Dominant Ethereum-Backed Stablecoin
The growth of USDC in 2021 is more tremendous than that of Tether. The Ethereum-based USDC stablecoin is gaining immense traction as the experts deem it as the most dominant asset.
In coming weeks it is very likely USDT’s share of the stablecoin supply on Ethereum will fall below 50% for the first time.
USDC is quickly emerging as the dominant stablecoin on Ethereum in large part due to its growing role in DeFi.
— Ryan Watkins (@RyanWatkins_) June 29, 2021
According to the analytics research, there is now an increase in the demand for USDC due to abrupt popularity in the DeFi ecosystem. Such demand has positioned USD Coin to bag more market shares in the crypto space.
From what Ryan Watkins, a credible researcher, predicted, the stablecoin share for Tether on Ethereum could dip below 50%. In addition, Watkins revealed that more than half of USDC’s total supply is now in smart contracts.
The equivalent value for this USD Coin supply is about $12.5 billion. According to Messari, CoinMetrics data estimates show that USDC’s stablecoin supply is over 40% on Ethereum.
In his tweet, Watkins said that the next few weeks might not favor USDT’s stablecoin supply on Ethereum. He envisages a dip below 50% for the first time for USDT’s stablecoin supply share.
On the other hand, he sees USD Coin becoming the prepotent Ethereum stablecoin because of its high reputation in the DeFi ecosystem.
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More so, Watkins further acknowledges:
“Although this percentage is not as high as DAI, USDC leads by a wide margin in dollar terms and has become the preferred stablecoin in DeFi for now.”
This makes it the most preferred digital asset for staking in DeFi protocols’ smart contracts.
He said that even though USDC’s percentage is still low compared to DAI, it’s ahead with a wide margin in terms of the dollar. This pushes USDC to emerge in the DeFi sector as the preferred stablecoin.
From its 1.3 billion circulating supply, USD Coin made an upward growth of over 1,820% since the beginning of 2021. According to Circle, the coin’s stablecoin supply is currently at 25 billion.
Moreover, a recent report suggests USD Coin will get more exposure once it’s issued on other networks in the near term. A few hours ago, one of the biggest media outlets in the cryptocurrency industry reported that the USD Coin will gain huge attention once it goes live on other networks. The report reads:
“We anticipate that in the coming months USDC will become available on Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron.”
What’s Ahead For Tether (USDT) As USDC Gains Significant Traction
Tether’s transparency report reveals that there are 62.7 billion circulating USDT. This portrays an increase of about 200% since the beginning of 2021.
Currently, only 30.9 billion from the total supply are on the Ethereum network. This value has been experiencing consecutive dipping through the year caused by high network transaction fees.
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According to a researcher, the largest USDC consumers are DeFi lending protocols such as MakerDAO, Aave, and Compound. Their holding is about 23% of the total USD Coin supply.
The researcher explained that while the launching of Compound Treasury still pends, there’s likely to be a continuation in the trend.
Treasury is a new product that will offer institutions 4% interest on USD Coin. This new product will also give initiatives that will revolve around the DeFi API of Circle.
The Circle protocol is a new platform that promotes decentralized finance operations for businesses.
Recall that Clinbase, a U.S. crypto exchange, promised 4% interest on USDC holdings earlier this week. Their action was a spark to the stablecoin.
As the USDC stablecoin's significance grows, the bulls are keeping its price intact | Source: USDCUSD on TradingView.com
While the bears keep the entire DeFi market in the red zone, the USD Coin is thriving and it has claimed the most dominant stablecoin spot.
Featured image from Pixabay, Charts from TradingView.com
Stablecoin insurance firm Bridge Mutual to protect against possible Tether depegging
Years of regulatory uncertainty around Tether could be offset by newfound investor confidence if an emerging insurance protocol for USDT gains traction.
Messari: USDC set to become ‘dominant’ stablecoin on Ethereum
Tether supplies on Ethereum are dwindling as USD Coin demand grows and grows.
The USDC Stablecoin Will Soon Expand Its Reach To 10 More Networks
The second biggest stablecoin by market capitalization is already a multi-blockchain project. Soon, though, USDC will live almost everywhere. According to Coindesk, it will soon be available in, “Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron.” That will bring the total to 14; since USDC is already functional in Ethereum, Algorand, Stellar, and Solana.
The biggest stablecoin, Tether or USDT, is only available in 8 of those. Currently, the most used stablecoin is Tron’s version of USDT.
Related Reading | Is USDC’s Billion Dollar Growth A Sign Crypto Smart Money Is Ditching Tether?
With that in mind, CENTRE said:
“We anticipate that USDC on these blockchain platforms and multichain protocols will further accelerate the use of the world’s fastest growing digital dollar currency.”
The consortium that runs USDC, CENTRE, is a joint venture between Coinbase and payments processor Circle. The information comes from, “a draft announcement from USDC administrator CENTRE obtained by CoinDesk.”
USDC market capitalization | Source: TradingView.com
What Is USDC And How Does It Work?
For this, we have to go back to the academy. Coinzilla informs us:
USDC is one of the fastest-growing stablecoins pegged 1 to 1 to the US Dollar.
What is more remarkable is that Circle, the company that developed the stablecoin, is actually holding the amount of money required for backing the USDC in circulation.
That’s definitely a shot at USDT. Tether’s audit and legal issues have been a topic of contention in the cryptocurrency community for a while now. Can they back all the Tether they’ve minted? A burning question that’s harder to answer than you’d think.
For what is worth, USDC’s April independent audit is on the public record and says:
-
USD Coin (“USDC”) tokens issued and outstanding less tokens allowed but not issued (218,807,037) and less blacklisted tokens = 14,697,267,257 USDC
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US Dollars held in custody accounts are at least equal or greater than the USDC tokens outstanding at the Report Date and Time.
Back to Coinzilla’s academy, the stablecoin’s characteristics are:
In essence, USD Coin is an ERC-20 token that functions through the Ethereum Network. Nowadays, USDC transactions can also be settled through Algorand, Solana, and Stellar’s infrastructures.
Since the launch of USDC 2.0, the payment process is simplified, the gas fees being paid directly in USDC.
Related Reading | Circle’s Stablecoin USDC Passes Independent Audit, Fully Backed by USD
Stablecoins Are Supposed To Rule The USA in 2021
The official love affair between the US government and stablecoins started last January, when Jeremy Allaire from Circle announced that, “the largest US banking regulator with new guidance allowing US banks to use public blockchains and dollar stablecoins as a settlement infrastructure in the US financial system.” According to him, “Decentralized, permissionless, open source and internet mediated software is literally becoming the foundation for not just the US financial system but for the global economy.”
3/ The new interpretive letter establishes that banks can treat public chains as infrastructure similar to SWIFT, ACH and FedWire, and stablecoins like USDC as electronic stored value. The significance of this can’t be understated.
— Jeremy Allaire (@jerallaire) January 4, 2021
Recently, Randal K. Quarles, the Federal Reserve’s Vice Chair for Supervision, considerably raised the stakes:
In my judgment, we do not need to fear stablecoins. The Federal Reserve has traditionally supported responsible private-sector innovation. Consistent with this tradition, I believe that we must take strong account of the potential benefits of stablecoins, including the possibility that a U.S. dollar stablecoin might support the role of the dollar in the global economy. For example, a global U.S. dollar stablecoin network could encourage use of the dollar by making cross-border payments faster and cheaper, and it potentially could be deployed much faster and with fewer downsides than a CBDC.
Will stablecoins like USDC and USDT substitute the Digital Dollar project? Could they be an alternative to CBDCs? We’ll have to wait and see.
Featured Images by NeONBRAND on Unsplash - Charts by TradingView
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USDC has seen huge growth and is gaining fast on Tether, the king of the stablecoins.
