Stablecoin News: After Tether, Circle’s $5 Billion USDC Issuance Comes Under scrutiny

Prashant Jha
November 29, 2021
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This Stablecoin's Market Cap Skyrockets Amid FUD In Tether, UST

Tether’s $1 Billion USDT print this week raised many eyebrows amid US federal agencies’ plan to tighten their scrutiny around stablecoin issuers. The major concern for authorities lies with the issuance backings that have been found misleading in the past. After Tether, now Circle’s latest $5 billion USDC has come under scrutiny.

Circle has issued $5 billion worth of USDC over the past month without offering much light on whether it’s cash or collateral backed. Technically, being a stablecoin, the circulation amount must be backed by an equivalent amount of stable asset, ideally US Dollar. However, audit reports from both Circle and Tether have shown only a small amount of the circulation supply is backed by cash or cash equivalents.
USDC

A Twitter user Paul Everton wrote that he doesn’t think USDC is legit anymore, pointing towards the recent USDC issuance. Everton believes since Circle hasn’t claimed the recent issuance as cash-backed, it’s most probably backed by some form of collateral. He went on to add that stablecoin issuer’s willingness to back circulation supply with collateral doesn’t make them any different from Hedge funds.

“Skeptics told me that USDC isn’t legit. I thought it was shady but ok because Coinbase wouldn’t want to engage in such bad behavior. But looks like The Future of Finance™ is awfully like the past of finance. Do whatever you can get away with, pay fines when necessary.”

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Can USDC Grow Out of USDT’s Shadow?

Circle issued USDC has become one of the faster-growing stablecoin in the crypto market which was mostly dominated by Tether’s USDT. At one point USDT had a market dominance of over 95%, but USDC has been catching up fast and now boasts of nearly 50% of USDT’s circulation supply. USDT has dominated the spot market while USDC gained momentum from the Defi market and now becoming a growing choice in the spot market as well.

US regulatory bodies such as CFTC and Federal Reserves have sought more power from Congress to regulate the stablecoin market. Thus, the controversy around two major stablecoin issuers at present would only make their case stronger.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
An engineering graduate, Prashant focuses on UK and Indian markets. As a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.