Circle increases transparency as USDC's market share skyrockets
Recently, the cryptocurrency market has experienced a turbulent period, when several firms declared bankruptcy or closed. Voyager Digital declared bankruptcy on Wednesday, becoming the second crypto lender to default after Three Arrows Capital.
In light of the current market circumstances, Circle attempted to reaffirm its commitment to openness and user safety in a blog post published on Tuesday. Jeremy Fox, Circle's chief financial officer, said his firm's priority is to maintain the financial integrity of the system - strong, reliable and secure. He added that other financial institutions offer fraudulent promises to save users' money only until the moment when things go bad.
The CFO said Circle's business model is about minimizing risks, not "taking risks and managing them."
He also explained how the firm fully secures USD Coin (USDC) reserves, emphasizing that Circle does not own these assets and that they are 100% owned by USDC holders in segregated accounts marked "in the interests of USDC holders."
"Circle is not allowed to use USDC reserves for any other purposes. Unlike a bank, exchange, or unregulated institution, we cannot lend them, we cannot borrow against them, and we cannot use them to pay our bills," Fox wrote.
As a result, in extreme situations, such as bankruptcy, USD Coin (USDC) can allegedly still be exchanged at face value. In addition, USDC reserves are completely separated from other Circle activities, which minimizes the risk of using them to cover other losses.
CEO of CircleJeremy Aller also recently provided documentation confirming that the stablecoin has sufficient liquidity. He tweeted a long thread with documents to increase public trust and transparency in the firm.
"Because so many firms face fundamental challenges and risks, Circle has expanded our own information about Circle and the USDC. I share it here so that people can leave a review. We started publishing this information a few days after the collapse of Terra," wrote Jeremy Aller.
The topic followed rumors that Circle had lost billions of dollars by offering wilder incentive programs to several banks, including Silvergate and Signature, to convert cash deposits into USDC stablecoin.
Some firms have experienced liquidity difficulties as a result of the bear market, which has led investors to fear that new ones will join them in the near future. Three Arrows Capital, once a well-known cryptocurrency investment company, has declared itself insolvent, and Celsius is also considering bankruptcy.
USDC is Not the Only Stablecoin under Threat
USDC is not the only stable coin reported on Twitter. Tether (USDT), the world's largest stablecoin, has also been criticized with similar statements. Paolo Ardoino, chief technology officer of Tether, recently said that traditional hedge funds have bet against stablecoins in the hope that they will lose the peg.
Meanwhile, USDC and Circle had a notable two months of growth compared to Tether. USDC's market capitalization has increased by 8.27% since May, peaking at $55.9 billion on July 2. On the other hand, the market capitalization of USDT fell by 19% to about $65.9 billion.
"Messari: The USDC stack continues to rapidly take market share away from USDT: USDC's market capitalization has grown by 8.3% since May, USDT's market capitalization has fallen by 19% to a record low of $66 billion," Alt Crypto Gems said in a statement.
https://coin-signal.com/cryptonews/circle-increases-transparency-as-usdcs-market-share-skyrockets-2/
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