Circle, the USDC stablecoin’s issuer, has advocated for the direct deposit of stablecoin reserves with the US Federal Reserve. On March 28, the company’s Chief Financial Officer, Jeremy Fox-Geen, published a blog post about trust and general transparency. “A US dollar-backed stablecoin requires access to the US banking system to allow money to seamlessly flow in and out of crypto, enabling the safe, secure bridges between blockchain-based finance and fiat banking that are essential to the long-term growth of digital assets,” Fox-Geen stated.
He then stated that approximately 80% of the stablecoin reserves were held in US Treasures, with the remainder in cash deposits in the banking system. He also linked to a transparency report. The remaining 20% is held in cash deposits to meet immediate liquidity needs.
He then mentions the recent string of bank failures, which impacted Circle as well because the company kept its cash in a Silicon Valley bank. Circle, according to Fox-Geen, has taken steps to mitigate any risks associated with banking systems. He mentions Circle has “always aspired to hold the cash portion of the USDC reserve directly with the Federal Reserve, fulfilling our vision of USDC as true tokenized cash” at this point. He does, however, mention that stablecoin legislation will be required.
The USDC stablecoin has had a rough patch in recent weeks. The stablecoin fell as low as $0.87, causing concern in the cryptocurrency community. This depegging was caused by the fact that $3.3 billion of its USDC cash reserve was held by the troubled Silicon Valley Bank.
However, the company and stablecoin have survived the crisis, and MakerDAO has voted to keep USDC as a DAI reserve. The stablecoin did regain its $1 peg, indicating that the worst is over and that Circle wants to ensure that USDC has additional safeguards.
Circle has also announced other developments, such as the fact that USDC will launch on Cosmos via the Noble network. Xapo Bank has also joined forces with Circle to accept USDC payments. The former is a licensed private bank that also serves as a Bitcoin custodian.
More importantly, Circle intends to establish a European headquarters in Paris. It has applied in France to become a fully registered Digital Assets Service Provider.
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