Goldman-funded startup Circle released, for the third consecutive time, 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 report” aims to dispel any doubts and reassure investors that its cryptocurrency is backed by U.S. dollars. The move is important due to nagging questions around Tether’s major stablecoin, which has been dogged by speculation that it holds insufficient capital to support its $2.6 billion market cap of USDT.
The audit report, 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 December 31, 2018, at 11:59 PM UTC, the company held a little over $251,211,209 compared to 251,211,148 USDC coin in circulation. Compared to the previous two reports, the figure nearly doubled from $127 million in November and was up 40 percent from $177 million reported earlier last month.
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The firm then concluded that Circle’s assets almost match the balance of its fully-backed USD token as of the same date.
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’s stablecoin is based on an open source fiat stablecoin framework developed and governed by the CENTRE project. Most recently, Binance enabled support for USDC deposits with trading on the stablecoin’s pairs, against Bitcoin and Binance’s token BNB, already started on November 17.
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.