Circle Announces Launch of USDC Stablecoin
The development comes at a time when many firms are joining stablecoin sector.
USDC Officially Launched By Circle
On Wednesday, Circle revealed that its stablecoin USDC had hit the market. Following the announcement, the coin will be exchanged on Poloniex with immediate effect. The exchange is operated by Circle. USDC will be insured by the dollar at ratio 1:1. The announcement comes at a time when the stablecoin market is gaining popularity.
Circle has a number of firms ready to release stablecoins. Reports indicate that Circle will be backing about thirty firms.
Apart from Poloniex, a number of trading platforms have agreed to enlist USDC. They include KuCoin, Coinplug, CoinEx, XDAEX and OKCoin. On top of that, the stablecoin will receive support from a number of popular coin wallet providers.
The entire project was launched in May after Circle made $110 million in funding. A section of the funds raised was used to facilitate the launch of the coin.
Goldman Sach is the main supporter of Circle. The funding which was deemed a success was spearheaded by mining giant Bitmain from China. The USDC project launch can be credited to Goldman's support in addition to the funding. At the beginning of this year, Circle successfully took charge of Poloniex at a cost of about $400 million.
Investors interested in the stablecoin can convert it into the dollar through the Circle conversion mechanism. USDC abides with the ERC-20 protocol. It is key to note that tokenizing for the dollar will be free. However, a .1% charge has been established for converting the stablecoin into fiat.
To maintain the 1:1 ration, Circle created the CENTRE. This is a group of different market players who will track and control the issuance of the stablecoin. Parties interested in providing the USDC must meet regulations put in place by the group. Key rules to adhere to include submitting bank statements that have been audited to indicate that the issuer has sufficient dollars on deposit in order to retain the 1:1 peg.
A look at the past few weeks, it is clear that the stablecoin market has been busy. Circle’s release comes just days after Gemini and Paxi stablecoins met the requirements for rollout. They will be regulated in New York. Additionally, Carbon and Havven recently released stablecoins.
Why Stablecoins Are Key
As part of cryptocurrency underlying structure, stablecoins seems to be serving this purpose perfectly. With stablecoins, investors can swiftly shift in and out of locations without causing capital gain charges. They also offer a simplified medium for trading since they keep the traditional systems at bay.
Since the emergence of stablecoins, tether has been the dominant one. It has maintained its position in the market despite questions over its 1:1 ratio validity. Market leaders have termed tether as a potential risk especially in regions where crypto markets are still being established. The main issue has been around solvency. Data indicates that by Wednesday, more than 2.8 billion of tether had been released.
Tether has made attempts to dismiss the solvency concern. It recently used a Washington DC-based law firm. The firm stated that everything was fine at tether. This move, however, led to more queries from stakeholders. With USDC already out, many people will be keen to see how it performs.