Investing in USD Coin (USDC) – Everything You Need to Know

What is USD Coin?

USD Coin (USDC) is a digital asset structured as a stablecoin.  It attempts to maintain stability through pegging to the US dollar on a 1:1 basis.  It is a largest digital asset of any kind by marketcap, and is a joint venture between United States based firms Circle and Coinbase, known as ‘Centre'

What is USD Coin's Purpose?

Like all stablecoins, the purpose of USD Coin (USDC) is to emulate the stability in value of an underlying asset.  In this case, USDC is meant to track the US Dollar.

Through its pegging to the US Dollar, USDC is able to offer investors and traders with the ability to not only escape the inherent volatility of the digital asset market, but do so without incurring the typically tax implications applicable when converting to FIAT.

Alongside its stability, USDC also functions as a means to transfer value on a global scale, making it popular for use within the remittance industry and cross-border transactions.

How does USD Coin Work?

USD Coin (USDC) operates by leveraging blockchain technology to provide a digital representation of the US dollar. While initially an ERC-20 token built on the Ethereum blockchain, issuance is now supported across a variety of networks such as Algorand, Solana, and more.

In practice USDC issuance takes place after Centre receives an equivalent amount of US dollars in their reserves. These reserves are regularly audited to ensure transparency and to attempt maintaining a 1:1 peg with the US dollar.  It should be noted that, like most stablecoins pegged to the US Dollar, each USDC is backed 1:1 in value.  This means that USDC reserve may be comprised of the US Dollar, Treasuries, strategic investments, and other stable assets.

When users acquire USDC, they can store, transfer, and trade it like any other cryptocurrency.  Users can redeem their USDC tokens at any time by returning them to the issuer and receiving an equivalent amount of US Dollars.

History?

USD Coin (USDC) was launched in September 2018 by Centre, a consortium formed by Circle and Coinbase. The collaboration between these two well-known cryptocurrency companies was established with the goal of providing a compliant and transparent stablecoin solution.  As it stands, Circle and Coinbase remain prominent players within the digital asset sector, with Circle offering various crypto-services, and Coinbase operating a leading cryptocurrency exchange.

Since its launch, USDC has gained significant traction and has become one of the most widely used and recognized stablecoins in the cryptocurrency market.

While USDC was long thought to be the most reliable and reputable stablecoin offering, its structuring came in to question in early 2023 when certain weaknesses were exposed, resulting in the asset temporarily ‘de-pegging' and dropping to as little as $0.87.

The aforementioned de-pegging was the result of instabilities within the US banking system that resulted in the sudden implosion of Silicon Valley Bank (SVB).  USDC was directly affected at the time, as Circle stored roughly $3B in reserves at the bank.

In the aftermath, the reputation of USDC took a sizable hit, resulting in a mass exodus of users searching out alternatives such as Tether (USDT).

In the time since, Circle has continued its efforts to remain the most transparent stablecoin on the market, as well as re-allocate reserves in an effort to avoid such counter-party risks in the event of future bank collapses.

Regulatory Status?

Stablecoins in general remain in a relative state-of-limbo with regards to regulation.  While their use is widespread, their potential classification as a security has been brought in to question on various occasions as entities such as the Securities and Exchange Commission (SEC) look to exert power over the industry as a whole.

How to Buy USD Coin (USDC)

Currently, USD Coin (USDC) is available for purchase on the following exchanges.

Uphold – This is one of the top exchanges for United States and UK residents that offers a wide range of cryptocurrencies. Germany and Netherlands are prohibited.

Uphold Disclaimer: Terms Apply. Cryptoassets are highly volatile. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong..

Paybis is a truly global company offering services to residents from 180+ countries, including Canada, Europe, UK, & USA.

Kraken – Founded in 2011, Kraken is one of the most trusted names in the industry with over 9,000,000 users, and over $207 billion in quarterly trading volume.

The Kraken exchange offers trading access to over 190 countries including Australia, Canada, Europe, and is a top exchange for USA residents. (Excluding New York & Washington state).

Binance – Accepts Australia, Singapore, and most of the world. Canada & USA residents are prohibited. Use Discount Code: EE59L0QP for 10% cashback on all trading fees. 

USD Coin – Touting Stability and Transparency Above All

What separates USD Coin apart from its rivals, is the efforts of Centre to provide market-leading transparency in to its operations and USDC reserves.  While it suffered collateral damage at the hands of TradFi in early 2023, USDC remains a popular option for digital asset enthusiasts looking for a stablecoin solution.