Coinbase president and chief operating officer Emilie Choi has announced that the reserves backing the stablecoin USD Coin (USDC) will be consolidated into cash and United States government treasuries.
A Sunday blog post from Centre Consortium — the entity that was collaboratively established by top U.S. crypto exchange Coinbase and blockchain financial services company Circle, which issues USDC — stated that USD Coin’s reserves will soon be entirely held in “cash and short duration U.S. Treasuries.”
On Twitter, Choi attributed the change in policy to backlash against USDC’s reserves expanding beyond cash, cash equivalents and U.S. treasuries in May. The changes to USDC’s reserves had not been reported until July, exacerbating public concern regarding the stablecoin’s backing.
4/ When Circle shared their May report about USDC reserves in late July (which included a more diversified pool of investments for the first time) we should have moved faster to update statements like that on our website. That was a mistake and Coinbase takes ownership for that.— Emilie Choi (@emiliemc) August 23, 2021
Choi emphasized that the new policy will be in effect by September, noting that USDC’s next two attestation reports continue to show a diversified portfolio for the stable token’s reserves.
“These changes are being implemented expeditiously and will be reflected in future attestations by Grant Thornton,” the blog post added.
Last month’s USDC attestation report for May revealed that the currency was backed 61% by “cash and cash equivalents,” and 12% by U.S. treasuries.
Certificates of Deposit denominated in U.S. dollars represented 13% of the token’s backing, while commercial paper comprised 9% and corporate bonds accounted for 5%. Municipal bonds also represented 0.2% of the stablecoin’s backing.
Since its launch in September 2018, USD Coin has grown to boast a nearly $28-billion market capitalization and expanded across five different blockchains.
In June, Centre announced plans for USDC to launch across 10 blockchain networks.