Coinbase Changes 100 Percent Dollar-Backed Claim for USDC on Its Website

The largest cryptocurrency exchange in the United States, Coinbase, has altered its description of the USD Coin (USDC) page on its website, following the latter’s revelation of its assets reserves.

Coinbase Alters USDC Description 

According to Bloomberg on Wednesday (August 11, 2021), Coinbase made a change on its website about the USDC token. While the former description stated that one USDC was “backed by one US dollar, which is held in a bank account”, that statement, however, seemed to be contradictory after a report showed that USDC reserves were not all held in cash. 

As reported by BTCManager back in July, an attestation report by major accounting firm Grant Thornton, revealed a breakdown of the assets backed by the token. According to the audit, 61 percent of USDC reserves were in cash and cash equivalents. Other reserves also included Yankee certificate of deposits (CDs), US Treasuries, commercial paper, and Corporate Bonds. 

While the USDC page about the coin further said that the token was “100% collateralized by a corresponding USD held in bank accounts of the issuer,” the page now reads something different. Bloomberg noted that Coinbase’s description of the stablecoin currently says:

“Each USD is backed by one dollar or asset with equivalent fair value, which is held in accounts with U.S.-regulated financial institutions.” 

Meanwhile, Andrew Schmitt, a spokesperson for Coinbase, stated that each USDC was backed by one dollar. According to Schmitt:

“Users can always redeem 1 USD Coin for US$1.00. We have added additional detail to our website for customers to understand more about USDC reserves.”

Stablecoins Growth a Concern for US Regulators

The USDC token entered the stablecoin market back in 2018, at a time when there were doubts about Tether’s (USDT) backing claims. While the USDT remains the largest stablecoin by market capitalization, USDC has grown to be its closest rival. 

With the exponential growth of stablecoins, US authorities are looking to increase regulatory scrutiny on the market. The country’s Treasury Secretary, Janet Yellen said it was important that a robust regulatory framework be established for stablecoins. 

Meanwhile, Jeremy Allaire, the CEO of Circle, the company behind USDC, said that the attestation report was to ensure transparency and accountability. 

The Circle CEO announced earlier this August that the company was planning to become a full-reserve national digital currency bank. Allaire added that the company was willing to work under the supervision of various US federal regulators