An analysis of the SC Decision in RBI Case
The Reserve Bank of India ('RBI') vide Circular - Prohibition on dealing in Virtual Currencies ('VCs') dated April 6, 2018 ('RBI Circular') ...
USD Coin (known by its symbol USDC) is a stablecoin that is pegged to the U.S. dollar on a 1:1 basis. The stable coin was originally launched on a pilot basis in September 2018 by a Centre consortium whose founding members are the USA-listed crypto exchange Coinbase and Circle International. Circle is a peer-payment service.
Every unit of USDC in circulation is backed up by $1 that is held in reserve, in a mix of cash and short-term U.S. Treasury bonds. Explaining the rationale behind USDC, Circle co-founders Jeremy Allaire and Sean Neville wrote: “We believe that an open internet of value exchange can transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more efficient and inclusive global marketplace that connects every person on the planet.” According to the Circle co-founders, individuals and institutions use USDC to deposit US dollars from bank accounts, convert those dollars into tokens usable everywhere the internet reaches (subject to the token’s compliance controls), and redeem USDC tokens and cash out to bank accounts.
The USDC is issued by regulated and licensed financial institutions that maintain full reserves of the equivalent fiat currency. Issuers are required to regularly report their USD reserve holdings, and Grant Thornton LLP, the sixth-largest accounting firm in the world issues report on those holdings every month. As per the latest report by Grant Thornton, the total USDC in circulation is around 42 billion making it the second-largest stablecoin after USDT. USDC issuers are required to:
Like other stablecoins, USDC is designed to reduce volatility relative to unpegged cryptocurrencies like Bitcoin. ETH
The stablecoin market has become exceedingly crowded over recent years — but the USDC has gained an upper hand over the competitors due to its transparency. Unlike USDT and BUSD, USDC is not involved in any regulatory wrongdoing. Backed by a US-listed entity also helped to gain trust from the adopters. USDT is accused of not being opaque of the backed assets.
Circle was the first company to earn a BitLicense (2015) from the New York Department of Financial Services which the industry terms as the toughest regulator of crypto. Coinbase obtained the BitLicense in 2017.
In 2021, Coinbase briefly contemplated diversifying the funds backing USDC but backed out after a community backlash. retracted that proposal after heavy community backlash.
1/ Quick update on USDC. Starting September 2021, USDC reserves will be held in cash and short-duration US government treasuries. This is the approach we want for USDC reserves. https://t.co/29liaGg2LA
— Emilie Choi (@emiliemc) August 23, 2021
USDC first launched on the Ethereum blockchain as an ERC-20 token and has since expanded to other blockchains including Solana, Stellar, and Algorand. While USDT operates on Bitcoin blockchain limiting usability. USDC can be used on multiple decentralized applications (e.g., DeFi) and a number of crypto exchanges (e.g., Coinbase, Gemini, Binance, Kraken).
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