We need to work together to promote the introduction of USD (cryptocurrencies), and we must start with the facts. We corrected the report after reading an article by Dan Burstein, chief compliance officer at Paxos, entitled “Regulated stable coins means having a regulator.”. If you missed it, this is an inaccurate attack on USDC, which has a market capitalization of $2.75B, and the Centred Consortium, of which Coinbase is a member, governs it.
How many stable coins are there?
Coinbase remains coin agnostic and supports many stable coins on our platform, including Paxos and USDC. Paxos issues USDC one of the several alternative stable coins with a market capitalization of $900 million. We felt it was important to share this contribution to verify misinformation and misjudgments of crypto.
USDC tokens are stablecoins with other names. The USDC is a regulated digital asset for a simple reason: tokens are regulators. USDC governs the storage of value instruments such as prepaid cards. State money transfer laws regulate value retention products. Issuers of USDC districts are subject to the oversight of 46 state regulators, who conduct frequent audits of circular activities.
Tokens backed by illiquid, risky bonds are a critical weakness that regulators allow because they pose an undue risk to their customers. Customer protection laws come with the explicit aim of ensuring that value retention is secure. The same laws protect the money that customers hold with Coinbase and PayPal. State regulators require asset backing for USDC, provided the company returns to the list of eligible investments in USD backing in which you can invest USDC. The state of California, for example, does this.
The only way to protect customers and customers is proper regulation of financial services companies, including full supervision of the products and services offered by these firms. Must verify direct control of customer protection, handling, planning errors, privacy protection, uniform reservation practices, and audits. That is what “right” means, and that is what it is about. That is why fact-checking rules are crucial.
Circle, the USDC issuer, is a money services company registered with FinCEN and 46 state regulators. All reserves report to the state following the money transfer laws—the county’s resources by Grant Thornton, a leading global accounting firm. You can find audited 2020 financial statements.
A month later, Grant Thornton confirmed that the reserve balance corresponded to the USD in circulation. You can find the certificate here.
The issuer can use consumer funds to make risky, high-return investments for its financial benefit—this risk comes with the investment requirements permitted by the state. The US reserves do not contain high-return assets.
Many issuers of store value instruments report reserves as assets on their balance sheets. This is a common and acceptable accounting practice; it should not be wrong because Circles considers USDC to reserve the corporate property. The reserves are held in a circle on the balance sheet, implying that the districts think they are their property. The most important test to verify this is to offset the liabilities against the reported assets. Their financial statements show that the reserves are separate for the benefit of USDC holders. They deposit the corresponding penalties, making it clear that the funds belong to them.
USDC is regulated; the reserve corresponds to the state licenses and has proven stable. Stablecoins have foreign accounts that customers should pay attention to. Coinbase encourages its customers and crypto market participants to explore the cryptocurrencies with which they do business.