Circle, issuer of the world’s second-largest stablecoin USDC, has announced plans to be 100% backed by cash and short-term U.S. Treasuries by September. The company’s most recent attestation showed USDC’s US$22.2 billion supply was backed by only 61% “cash and cash equivalents.”
- Circle had indicated earlier in the month that it wishes to become a full-reserve national digital currency bank in the U.S., making this announcement an important step in that process. Company CEO and co-founder Jeremy Allaire said of the plan: “We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more efficient, but also a safer, more resilient financial system.”
- The project appears to have the backing of the Federal Reserve Governor Christopher Waller, who supports the creation of a private sector digital currency as opposed to a central bank digital currency, which are growing in popularity elsewhere in the world. “The private sector is already developing cheaper payment alternatives to compete with the banking system … Hence it seems unnecessary for the Federal Reserve to create a CBDC to drive down payment demands we see by banks,” Waller said.