History
Inception and Launch
USDC was launched in September 2018 by Circle Internet Financial and Coinbase, under the umbrella of Centre Consortium. Centre aimed to establish a standard for fiat-backed digital currencies. Initially launched on the Ethereum blockchain, USDC was ERC-20 compliant, facilitating easy integration with Ethereum-based decentralized applications (dApps). Beyond Ethereum, USDC expanded to other blockchains, including Algorand, Solana, and others, to increase accessibility and reduce transaction costs.
USDC quickly gained popularity due to its regulatory compliance and transparency. It was listed on major cryptocurrency exchanges, enabling widespread trading and adoption.
Regulatory Compliance and Audits
Transparency: Circle and Coinbase ensured transparency by regularly publishing audits of the US dollar reserves backing USDC. This transparency aimed to build trust and credibility within the cryptocurrency community and regulatory bodies.
Regulatory Framework: USDC adhered to US financial regulations, distinguishing itself as a compliant stablecoin amidst regulatory scrutiny of the broader cryptocurrency industry.
Institutional Use and DeFi Integration
Institutional Adoption: USDC became a preferred stablecoin for institutional investors and payment processors due to its stability and regulatory clarity.
DeFi Boom: During the DeFi (Decentralized Finance) boom, USDC played a crucial role as a liquidity provider and collateral asset, integrated into various DeFi protocols for lending, borrowing, and yield farming.
Reserves
Before mid-2021, Circle asserted that each USDC was supported by a dollar held in reserve or by other “approved investments,” although these investments were not explicitly outlined. In June 2021, the phrasing on the Circle website transitioned from the previous claim of being “backed by US dollars” to being “backed by fully reserved assets”
In 2020, the USDC reserves were regularly confirmed (though not audited) by Grant Thornton, LLP. By 2021, monthly confirmations of these reserves could be accessed on the Centre Consortium’s website.
Use Cases
USDC is available as an ERC-20 token, and on other blockchains. Visa began a pilot program to send USDC over the Solana blockchain to the payment firms Worldpay and Nuvei, who could then transfer payment to merchants.
