In the crypto world, there are many stablecoins. However, only few manage to secure their position within the top 10 cryptocurrencies in terms of market capitalization. USDC nailed it. Let's learn who are the brains behind the project and whether it is worth investing in USDC.
What is USD Coin
USD Coin (USDC) is a dollar-pegged stablecoin. Its exchange rate is pegged to the US dollar at 1:1, which means 1 USDC equals 1 dollar. The project was launched in October 2018 by the fintech company Circle and the popular crypto exchange Coinbase. Circle holds responsibility for issuing tokens.
The USD Coin's main objective is to provide users with a convenient way to transfer and exchange money globally, offering a more efficient way than traditional fiat options.
Developers' aim is for 1 USDC to always hold a value of $1, but, in fact, the stablecoin’s exchange rate experiences fluctuations. High demand might increase its value slightly beyond $1, while a surplus of USDC in circulation could make the price less than $1. However, observations show no significant price deviations thus far.
On March 13, 2020, USDC reached its all-time high (ATH) of $1.03. Following that day, on March 19, 2020, stablecoin declined the most, decreasing as low as $0.97. Both deviations were during the COVID-19 crisis. Probably, at first, people started exchanging other crypto for USDC as stablecoins are easier to sell for fiat, and then exchanged stablecoins for fiat by selling USDC, causing the coin to drop in price.
According to the project's team, there are 1.8 million USD Coin holders in 190 countries worldwide. The coin's trading volume is $4 billion, with 26 billion USDC in circulation. To date, USD Coin transactions have totaled $11.97 trillion.
USDC is the sixth-largest cryptocurrency by market capitalization. Tether (USDT) is the only token that overcomes USD Coin in the stablecoin category.
As of the time of writing, USDC runs on nine blockchains: Algorand, Arbitrum, Avalanche, Ethereum, Flow, Hedera, Solana, Stellar, and TRON. Developers are headed to integrate USDC into Polkadot, Near, Optimism, Cosmos, and Base networks.
The USDC market cap peaked at the end of June 2022 at $55.8 billion.
Since June 2022, USDC capitalization has been declining. The process accelerated in March 2023, amid Silicon Valley Bank collapse, which held part of the USDC collateral reserves. The vertical line indicates the peak of USDC’s market capitalization at the end of June 2022 at $55.8 billion. The red oval denotes the date of the Silicon Valley Bank collapse, which expedited the decline in stablecoin capitalization.
How is USDC backed
USD Coin is fully backed by highly liquid fiat reserves. Here are the details:
💰 80% consist of short-dated U.S. Treasuries, securities with a predetermined maturity. These instruments enable the government to borrow money in the domestic market at interest by offering income to market participants.
💰 20% comprises cash deposits within the US banking system. This is regular money in digital or physical form, which the owner transfers to a bank deposit.
This method of collateralisation is better than just storing all the stash in cash as it allows you to earn and increases the safety of reserves.
Collateralised assets (blue bar on the right) are always slightly larger than USDC issued (blue bar on the left). Additional funds allow the company to quickly issue new stablecoins to cover demand.
Independent financial institutions are responsible for storing USDC collateral reserves (not specified by Circle). In March 2023, Circle revealed that part of the collateral was at Silicon Valley Bank, which went bankrupt, leading to USDC immediately dropping below $1.
Reserve audit reports are published on the project website every month. Check for June 2023.
Where to buy USD Coin: 3 options
🔥 The most profitable and safest way is through the licensed itez platform. You can buy USDC on itez with a regular bank card. The platform supports 30+ fiat currencies, including dollars, euros, tenge, lira, and kroner. Purchases below 300 euros require no verification.
👌 The most popular one is through the crypto exchange. Here, in the Markets section, you can see the exchanges listing USD Coins. Prior to purchasing crypto, register and verify your account.
⚡️ The fastest one is through the exchanger. You can choose an exchanger with BestChange. In the "Give" section, select the asset you want to exchange, and in the "Get" section, opt for USDC. The platform will show all the available options. Notably, this method is inferior in terms of security compared to the previous two options. However, many exchangers may not require verification.
How to store USDC
Given its substantial capitalization and popularity, USDC is widely supported by different wallets. Check our review of crypto wallets — it will help you choose the most convenient one.
While choosing a wallet, pay attention to the coin standard supported by USDC. Currently, it operates on nine blockchains.
Blockchains vary by transaction costs and speeds. For instance, Avalanche handles 4,500 transactions per second, in contrast to Ethereum’s capacity of 15. Thus, transferring USDC to Avalanche is faster than to Ethereum.
Furthermore, the blockchain you select also defines the token standard. The Ethereum network provides access to the common standard, ERC-20. This standard is supported by the majority of wallets and crypto exchanges, simplifying the process of selling or exchanging USDC.
Here you can learn more about stablecoin standards and their differences: What are stablecoins.
Use our simple instruction on how to create a USDC wallet.
What you need to know about USDC creators
Both USDC creators, Circle and Coinbase, are now under regulatory pressure.
- In June 2023, the US Securities and Exchange Commission (SEC) accused Coinbase of illegally offering unregistered securities.
- In October 2021, Circle was accused of operating its subsidiary, Poloniex, without a proper license.
Despite the troubles, Coinbase remained undeterred. In August 2023, the crypto exchange bought a minority stake in Circle. Several other major market participants, such as BlackRock and Fidelity, also backed USDC’s issuer.
In the history of the crypto market, we have already seen instances when the watchdog's pressure forced the termination of stablecoin issuance. This happened to Binance USD (BUSD) in February 2023. Prior to suspension, BUSD ranked one of the 10 biggest coins in terms of capitalization, but it has since dropped to the 23rd position.
Nonetheless, USDC creators continue to push the project forward. In August 2023, Circle announced that it would commit $1 billion to promote USD Coin within the stablecoin market.
Is it risky to buy USDCs
Stablecoin issuers are now under the regulatory scrutiny. However, USDC’s status looks no worse than its closest competitors. Regular audits and its consistent ties to the dollar underscores its reliability. So, USD Coin remains a viable option for purchase.
The most favorable conditions and convenient tools to purchase USDC are provided by itez. You can buy USD Coin with drams, manats, tenge, and other fiat using a bank card within just a few minutes. Do not forget to get a wallet before buying, and pay attention to the token standards.
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This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.
