Hard to see how a USA issued crypto coin used as currency doesn't crush these other coins.
Coinbase backs off promise that each USD Coin is backed by $1 in a bank account
Coinbase backs off promise that each USD Coin is backed by $1 in a bank account
- Coinbase Global's (NASDAQ:COIN) website no longer promises customers that each USD Coin (USDC-US) they have in a Coinbase account is backed by a U.S. dollar in a bank account, Bloomberg reports, citing the company's website and other disclosures.
- USD Coin is marketed as a stablecoin, meaning it has a fixed price and can be redeemed for fiat currency, unlike volatile cryptocurrencies like bitcoin. The claim that it was backed by actual dollars helped USD Coin climb to be the world's second-largest stablecoin with $28B in assets.
- Coinbase (COIN) offers USDC in partnership with Circle Internet Financial, which last month disclosed USD Coin's assets for the first time. It turns out that assets held to back the stablecoin include cash & cash equivalents (61%), commercial paper (9%), corporate bonds (5%), U.S. Treasurys (12%), and Yankee certificates of deposit (13%).
- The corporate bonds and commercial paper could fall in value and aren't as easily liquidated as the cash and cash equivalents holdings.
- "Each USDC is backed by one dollar or asset with equivalent fair value, which is held in accounts with U.S.-regulated financial institutions," a Coinbase spokesman said in a statement to Bloomberg.
- As recently as Monday, Aug. 9, Coinbase said on its website that USD Coin is backed by dollars held in a bank account.
- On Monday, Circle Internet Financial said it wants to become a full-service federally chartered crypto bank.
- Last month, Federal Reserve Chair Jerome Powell said stablecoins need increased regulation to protect their users.