Goldman-funded startup Circle released a report that indicates the company behind US dollar-pegged stablecoin USDC does possess sufficient capital to back each individual token on a 1:1 basis.
The attestation of conformity, issued by the accounting firm Grant Thornton LLP, demonstrates that Circle held — at one point — fiat reserves that are slightly above the number of issued and outstanding USDC tokens in circulation.
Founded in Chicago in 1924, Grant Thornton is the US arm of UK-based Grant Thornton International Ltd, a top five professional service firm.
The entirety of the report, available via Circle’s website, consists of a mere two pages. It shows that at a single snapshot point on October 31, 2018, at 11:59 PM UTC, the company held a little over $127,412,240 compared to 127,408,827 USDC coin in circulation. The firm then concluded that Circle’s assets almost match the balance of its fully-backed USD token as of the same date.
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The new report released by Grant Thornton, however, stated that the audit firm doesn’t express any opinion about the effectiveness of USDC’s internal controls.
Tether’s Implications for the Crypto Market
Onboarding a major accounting firm, which can be held accountable by third parties for financial information, to engage in an audit of a crypto token is also a notable success for Circle’s initiative. The developing nature of the cryptocurrency industry, combined with the lack of regulatory oversight, makes the potential risk associated with a comprehensive audit of USDCs or any other crypto asset too high for accountancy firms.
Circle seeks to reassure investors that its cryptocurrency is backed by U.S. dollars after Tether’s major stablecoin, once represented over 17 percent of all crypto daily volumes, has been dogged by speculation that it holds insufficient capital to support its $2.6 billion market cap of USDT.
In addition, Circle’s New York BitLicense offers a fully audited alternative, in contrast to Tether which has been the subject of controversy and regulatory scrutiny.
The topic of stablecoins is generating buzz in the crypto community these days. The major application for such assets has been as a mechanism for trading and hedging in global crypto capital markets.