USDC Circle stablecoin issuer set aside $1 billion for a rainy day
Date: 2023-08-12 Author: Karina Ziganova Categories: BLOCKCHAIN, CRYPTO PAYMENTS
U.S. USDC issuer Circle hopes $1bn reserve will stop supply shrinking and help compete with other stablecoin issuers
Circle Internet Financial, which issues USDC stablecoin, is preparing for a global transition to stablecoins. This was announced in an interview with Bloomberg by the company's CEO Jeremy Aller.
What happens to the USDC supply
In June 2022, the supply of USDC peaked at $56 billion. Since then, it has decreased by 53% and now there are about 26 billion USDC in circulation, which is just under 21% of the entire stablecoin market.
According to the head of the company, some disturbing events have affected the status of USDC. However, Circle has $1 billion in reserve — this money should protect the company from problems in the crypto industry.
It is not only the USDC that is experiencing difficulties. Earlier, the editors of BeInCrypto said that the supply of stablecoins continues to fall.
Aller indirectly blames the Binance crypto exchange for what is happening with USDC supply volume. In September 2022, he stated that Binance had decided to phase out USDC in order to encourage the use of its native token.
In addition, Circle's position was strongly influenced by its connection with the now bankrupt Silicon Valley Bank - the company's accounts in this bank had $ 3.3 billion. In March, USDC had a depeg - the value of the stablecoin for some time got rid of the dollar. This event greatly undermined the confidence of users in this asset.
However, there is also positive news. Circle capitalized on rising interest rates, generating $779 million in revenue in the first half of 2023, more than in 2022 in full. Aller remains optimistic, commenting on the situation as follows:
“Profits are significantly higher than we expected. This gives us a margin of safety and an opportunity to invest in the development of new sources of income, product development and global expansion.”
New players in the stablecoin market
This year, an already crowded market has seen a plethora of new stablecoins. The most notable of these was PYUSD, which was announced by PayPal earlier this week.
Other recently launched stablecoins include Binance-backed First Digital USD (FDUSD) and Aave’s algorithmic stablecoin GHO.
