4th July 2022 > > USD Circle.

tl;dr

USDC Circle (USDC) is in the sights of the doom-mongers.

Market Snap (at time of writing)

Market Wrap

With US markets closed for the long weekend markets are likely to stay range-bound for now.

Curious Cryptos’ Commentary – USD Circle (USDC)

USDC is a stablecoin which has been pretty successful in maintaining a 1:1 peg to the dollar:

With a market cap of $56bn I believe it is the 4th largest crypto currency trailing Tether (USDT) by $10bn or so.

Tether’s self-inflicted problems – stemming from its unwillingness or inability to be totally open and honest about its reserve assets – have been commented upon before in these pages. It does not make for pretty reading.

USDC has taken a far more sensible route, employing BNY Mellon, the oldest bank in the US with $45 TRILLION assets under management (AUM), as its primary custodian. CEO of Asset Servicing and Head of Digital at BNY Mellon, Roman Regelman, explains the benefits of this arrangement:

“Our role as a custodian for USDC reserves supports the broader marketplace and brings value to clients, founded on our role at the intersection of trust and innovation.”

USDC holds only cash and short duration US Treasuries (viewed as cash equivalent) as reserves, the composition of which is audited, and reported, by Grant Thornton, a major audit form not located off-shore as is the situation with USDT.

…

I often field questions about staking stablecoins to earn passive income of 10% or more on various centralised and decentralised exchanges.

For me, the risks involved do not come anywhere close to being compensated for by the returns on offer. The CCCs from 1st and 2nd November 2021, and those of 22nd and 23rd December 2021, explain in more detail my reservations, and also the only example of lending stablecoins that makes any kind of sense to me.

If I was forced to choose a stablecoin to hold, and invest, then USDC would rank much more highly than USDT.

Curious Cryptos’ Commentary – Or maybe not

It is open season for naysayers to find a platform to air their views.

Doing the rounds on crypto-twitter is an attack on USDC in pictorial form:

It is hard to assess how much of this is actually true. In general, it doesn’t pass the sniff test with comments like “Basically an aquarium for traders”, which is exactly the sort of comment someone who is very ill-informed will make.

But we do know that there is an excessive amount of leverage in the crypto world right now, and some of that must be unwound before markets can make a meaningful recovery.

In the meantime, doomsters can cause a lot of damage simply through spreading FUD.

I am beginning to think that the regulator’s focus on stablecoins is making a lot of sense.