Circle looks to reaffirm commitment to transparency as USDC market share soars

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The cryptocurrency market has experienced a turbulent period recently, with many firms filing for bankruptcy or closure. Voyager Digital declares its bankruptcy On Wednesday, Three became the second crypto lender to default after Arrow Capital.

In light of current market conditions, Circle sought to reaffirm its commitment to openness and user safety in a blog post published on Tuesday. Circle’s CFO Jeremy Fox said his firm’s priority is to maintain the financial integrity of the system — strong, reliable and secure. He added that other financial institutions make fraudulent promises to preserve user money, only to discard them when the going gets tough.

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The CFO said Circle’s business model is to mitigate risk, not “take and manage risk.” He also explained how the firm protects its USDC coin (USDC) reserves, emphasizing that Circle does not own these assets and separate accounts labeled “for the benefit of USDC holders”. USDC holders in the U.S. have 100 percent ownership. Fox wrote:

“Circle is not allowed to use USDC reserves for any other purpose. Unlike a bank or exchange or unregulated institution, we cannot lend to them, we cannot borrow against them, and we cannot pay our bills. Can’t use them to do that.”

As a result, in extreme situations such as bankruptcy, USDC coins (USDC) can still be redeemed at face value. Additionally, USDC reserves are completely separated from Circle’s other activities, reducing the risk of them being used to cover other losses.

Circle CEO Jeremy Allaire recently provided documents to demonstrate that stablecoins have sufficient liquidity. He published a lengthy Twitter thread with papers to increase public trust and transparency in the firm. The thread followed rumors that Circle had lost billions of dollars to several banks, including Silvergate and Signature, by offering wild incentive programs to convert cash deposits into the USDC stablecoin.

Some firms have faced liquidity difficulties as a result of the bear market, with investors fearing that more will join them in the near future. Three Arrows Capital, once a major cryptocurrency investment firm, has been deemed bankrupt, and Celsius is also said to be considering bankruptcy.

related: Circle’s USDC is on track to overtake Tether USDT as the top stablecoin in 2022

USDC is not the only stablecoin

USDC is not the only stablecoin generating buzz on Twitter. Tether (USDT), the world’s largest stablecoin, has also been slammed with similar claims. Tether CTO Paolo Ardoino recently said that traditional hedge funds have bet against the stablecoin, anticipating it will fall.

Meanwhile, Circle has had a remarkable two months in terms of growth in USDC compared to Tether. USDC’s market capitalization has risen 8.27 percent since May, reaching a peak of $55.9 billion on July 2. On the other hand, USDT’s market capitalization fell by 19% to about $65.9 billion.