Circle CEO Jeremy Allaire says that the United States will eventually pass legislation to regulate stablecoins and bring regulatory clarity to the crypto industry. In a new interview on the Unchained Podcast with Laura Shin, Allaire says that the ongoing debate on how to regulate stablecoins will likely result in a win for the digital […]
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Stablecoins from Circle and MakerDAO have been more unstable than those from Tether and Binance over the past couple of years, according to a new report from S&P Global.
Dollar-pegged stablecoins are not immune to dropping their pegs, but some such as Circle’s USD Coin (USDC) and MakerDAO’s Dai (DAI), have been more prone to depegging than others, according to analysts at S&P Global.
A September research paper from Dr. Cristina Polizu, Anoop Garg and Miguel de la Mata, delved into stablecoin valuation and depegging for five leading stablecoins: Tether (USDT), Binance USD (BUSD), Paxos (USDP), USDC and DAI.
The analysis revealed that USDC and DAI have spent more time below a dollar than USDT and BUSD over the past two years. In the longest and deepest de-peg event, USDC was below $0.90 for 23 minutes and DAI for 20 minutes.
However, USDT dipped below $0.95 for only one minute, while the price for BUSD did not drop below $0.975 at all between June 2021 and June 2023.
Moreover, the frequencies of de-pegging were far higher for USDC and DAI than USDT and BUSD over the two-year period.
The researchers noted that one-minute de-peg events “can be attributed to noise,” especially for thresholds closer to $1. Longer de-peg events were considered “more meaningful” but the results still favored USDT over USDC.
USDC dropped to $0.87 in March 2023 in connection with the Silicon Valley Bank collapse. USDC issuer Circle had $3.3 billion of its $40 billion USDC reserves at the time with SVB.
MakerDAO was one of the largest holders of the stablecoin at the time, with over 3.1 billion USDC in reserves collateralizing DAI which also de-pegged.
“Maintaining the peg and a stabilization mechanism requires good governance, adequate collateral and reserves alongside liquidity, market confidence and adoption,” Dr. Polizu and colleagues concluded.
Related: PayPal’s stablecoin opens door for crypto adoption in traditional finance
Tether has been plagued with mainstream media FUD for years, yet the findings suggest USDT has been more stable than its rival USDC over the same period.
Moreover, the supply of USDT has increased by 25% since the beginning of the year to 83 billion, giving it a commanding stablecoin market share of 67%. This has largely been at the expense of Circle, which has seen USDC supply shrink by 41.5% and market share fall to 21% over the same period.
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US Dollar Coin (USDC) stablecoin issuer Circle is responding to proposed changes to the European Union’s (EU) financial crime policies, which would impact crypto companies. In May, the European Banking Authority (EBA) launched a public consultation on amendments that would extend the scope of EU’s guidelines on money laundering and terrorist financing (ML/TF) risk factors […]
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The partnership will purportedly bring USDC to 2 million users in Chile.
Fintech company Circle announced a partnership with Mercado Libre on Aug. 29 to bring the USD Coin stablecoin to Mercado Pago.
1/ The largest fintech in LATAM, @mercadopago, part of Mercado Libre, the Amazon of LATAM with 200M users, is rolling out support for USDC in key markets, starting with Chile. Momentum for USDC and digital dollars building around the world! https://t.co/3mNQxXvNUC
— Jeremy Allaire (@jerallaire) August 29, 2023
Referring to Mercado Libre as “the Amazon of LATAM with 200M users,” Circle CEO Jeremy Allaire posted a thread on X (formerly Twitter) announcing the launch of USD Coin (USDC) on the retail giant’s Mercado Pago online payment platform.
USDC is a stablecoin, meaning it’s pegged to the U.S. dollar. As one of the most widely adopted stablecoins, its launch on the platform in Chile represents further utility for both cryptocurrency and the United States dollar in Chile.
Travel and consumer awareness sites often mention that the U.S. dollar isn’t accepted for payment as often in Chile as it is in many other Latin American countries.
According to Matias Spagui, senior director of Mercado Pago:
“The US dollar is one of the most stable currencies in the world and a simple vehicle to ensure wealth preservation amidst general uncertainty. With the launch of this stablecoin we seek to diversify access to cryptocurrencies and offer the more than two million Mercado Pago users an alternative that matches the value of the dollar.”
Mercado Libre announced its intent to accept cryptocurrencies as payments back in 2021. In the time since, it’s made strides toward doing so, with the integration of USDC for users in Chile being just the latest example. Earlier this year, the company partnered with Paxos to integrate the Pax Dollar (USDP) stablecoin for users in Mexico as well.
Circle has also made headlines recently with the announcement that Coinbase would take an equity share in Circle upon the dissolution of the Centre governance body. As Cointelegraph reported, the deal gives Circle additional responsibilities as USDC launches on multiple blockchain platforms going forward.
Prior to the realignment, Circle announced that it was preparing for the eventual intrusion of traditional finance and Big Tech giants into the cryptocurrency and stablecoin spaces by gathering resources.
Related: Circle preps $1B war chest to deal with market threats from PayPal and others
Circle announced that a Base version of its USDC stablecoin would be available soon, eventually eliminating the need for the USDbC bridged version.
Circle’s United States dollar stablecoin, USDC, will launch natively on the Base network “next week,” according to an Aug. 29 social media post from CEO Jeremy Allaire. The new version will replace the current US Dollar Base Coin (USDbC) that most users rely on as a substitute.
Native $USDC on @BuildOnBase. Coming next week. #StableSeptember. Let's go! https://t.co/oqfI0ZZhCn
— Jeremy Allaire (@jerallaire) August 29, 2023
Coinbase’s Base network launched on Aug. 9. At the time, no native version of USDC existed on the network. Users could not deposit cash into a Circle account and receive equivalent USDC on Base. To solve this problem, the Base team allowed users to bridge USDC from Ethereum via an official bridge app. The token issued by the bridge is called “USDbC,” and is backed by native USDC locked on the Ethereum network.
The Aug. 29 announcement states that Circle will soon begin issuing USDC on Base, eventually doing away with the need for a bridged coin backed by the Ethereum version.
Related: Base project RocketSwap shares emergency plan following $865K exploit
According to an accompanying blog post, the contract for the new token has already been deployed to Base. On launch day, the team will explain how the current USDbC can be redeemed for native USDC. The team will also “work with ecosystem apps” to allow liquidity providers to “smoothly transition” to providing liquidity for the new coin, and the current Base bridge that issues USDbC will continue to operate normally for the time being.
The Circle team has not announced a specific date for the coin’s official launch, as Allaire stated only that it will happen sometime “next week.”
Base network gained over 136,000 active users on Aug. 10, the day after its launch. On August 25, Base announced it would share its revenue and partly govern the upcoming “Superchain” consisting of Base, Optimism, and other networks.
This week's Crypto Biz explores the latest on Binance's global on-ramps and off-ramps, Coinbase-Circle re-alignment, Shopify's take on USDC and China's blockchain data exchange.
Global regulatory landscapes are once again proving to be a turning point for crypto companies, demanding constant adaptation to navigate shallow regulatory waters across the world, particularly in the United States.
In the latest developments, Coinbase and Circle decided to dissolve the Centre Consortium in a strategic realignment driven by demand for regulatory clarity on stablecoins, possibly as an anticipation of upcoming legislation coming from the U.S. Congress.
A legal alternative to remaining operational was also sought by Binance.US this week. The exchange announced a partnership with MoonPay featuring the dollar-pegged stablecoin Tether (USDT) as its new “base asset” for all transactions, allowing a path for users to transact in U.S. dollars while possibly sidestepping potential regulatory hurdles.
In the meantime, global Binance continues facing challenges with on and off-ramps. Almost 30 days before Paysafe ends its support for fiat transactions in Europe, its users in the region are reporting difficulties with fiat withdrawals.
In this environment, fast adaptation is more than a strategy, it's a survival skill. For now, crypto firms dance to songs that are yet to be written.
This week's Crypto Biz explores the latest on Binance's global on-ramps and off-ramps, Coinbase-Circle re-alignment, Shopify's take on USDC and China's blockchain data exchange.
Customers of crypto exchange Binance are allegedly facing troubles with fiat withdrawals in Europe due to issues related to Single Euro Payments Area (SEPA) transfers. The news comes a few months after Binance informed users that its euro banking partner, Paysafe Payment Solutions, would discontinue support for the crypto exchange by Sep. 25. After this date, users will have to update banking information and may be required to accept new terms and conditions to continue using SEPA services, the exchange said. Meanwhile, in the United States, Binance.US announced a new partnership with crypto payments firm MoonPay to make the dollar-pegged stablecoin Tether (USDT) its new “base asset” for all transactions, allowing a path for users to transact in U.S. dollars. Binance.US recently suffered a breakdown with its banking partners in the country, which saw fiat deposits on the exchange disabled since June.
Today, we're excited to introduce a new $USD on-ramp!
— Binance.US (@BinanceUS) August 22, 2023
✔️ Buy $USDT on https://t.co/AZwoBOgsqS through payment partners like @moonpay, which supports debit & credit card, Apple Pay, and Google Pay.
✔️ Sell USDT for USD to withdraw via bank transfer.
Learn more & get started ⤵️
Coinbase and Circle have redefined their relationship as the Centre Consortium is being shut down for "growing regulatory clarity for stablecoins" in the United States. The two organizations jointly launched the USD Coin (USDC) stablecoin in 2018 and have, since then, governed the token through the Centre Consortium. As the organization comes to an end, Circle will have enhanced responsibilities, including holding smart contract keys and regulatory compliance, while Coinbase takes an equity stake in Circle. Interest revenue will continue to be shared between them based on their holdings of the stablecoin. With a view to expanding its chain reach, USDC is also set to launch into Polkadot, Optimism, Near, Arbitrum and Cosmos networks.
1/ Some major news from @circle and @coinbase on the future of $USDC in this joint blog post from @brian_armstrong and I (@jerallaire). https://t.co/uHuxeRJtiI
— Jeremy Allaire (@jerallaire) August 21, 2023
E-commerce giant Shopify has added Solana Pay to its pool of options for payment, allowing millions of merchants to use the platform to accept crypto transactions, kicking off with USD Coin (USDC) stablecoin payments. Solana reportedly plans to add other altcoins to the platform in the coming months, including its native SOL (SOL) token and the meme token Bonk (BONK). Shopify estimates that 10% of all e-commerce transactions in the United States, or $444 billion of the world’s e-commerce market, are made through its platform. The network’s average charge is $0.00025 per transaction, while credit card fees range from 1.5% to 3.5%. In the last epoch, Solana’s users paid an average transaction fee of 0.000009664 SOL.
Chinese government officials unveiled a new data exchange powered by blockchain technology with over 300 enterprises — including Alibaba Cloud and Huawei — participating in the exchange’s debut. According to local news reports, the new Hangzhou Data Exchange will facilitate trading of enterprise information technology data, ensuring exchange trades are immutable and traceable. Despite cracking down harshly on private blockchain enterprises for much of the year, China is a staunch supporter of government-controlled Web3 initiatives.
Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.
Top US crypto exchange by trading volume Coinbase is investing in the USD Coin (USDC) stablecoin issuer Circle. Coinbase and Circle co-created USDC in 2018 and have jointly managed the asset, which aims to maintain a peg to the US dollar, through the Centre Consortium. In a new announcement, however, Coinbase chief executive Brian Armstrong and […]
The post Coinbase Invests in USDC Issuer Circle, Says Crypto Exchange Is Committed to Long-Term Success of Stablecoins appeared first on The Daily Hodl.
Circle will take on full operational and governance responsibility after five years, thanks to increased regulatory clarity.
Coinbase and Circle have redefined their relationship, according to identical announcements on the Coinbaseand Circle blogs on Aug. 21. The two organizations jointly launched the USD Coin (USDC) stablecoin and have until now governed the token through the Centre Consortium.
The Centre Consortium “will no longer exist as a stand-alone entity,” the blog past said, and governance and operations will be handled in-house. Circle will have enhanced responsibilities, including holding smart contract keys and regulatory compliance.
The crypto firms attributed the move to increased regulatory clarity:
“Circle and Coinbase […] Have agreed that with growing regulatory clarity for stablecoins in the U.S. and around the world, the requirement of a separate governance body like Centre, is no longer needed.”
Circle co-founder and CEO Jeremy Allaire said in an X (formerly Twitter) thread that Circle and Coinbase “are extending and deepening our commercial relationship, with Coinbase taking an equity stake in Circle.” No value was stated for the Coinbase share.
The new arrangement will increase the firms’ strategic and economic alignment, the blog posts noted. Interest revenue will continue to be shared between them based on their holdings of the stablecoin.
Related: Circle CEO: 70% of USDC adoption comes from outside the US
Circle and Coinbase launched USDC together in 2018. According to CoinGecko, USDC is the second largest stablecoin by market cap, at $26 billion, with Tether (USDT) ahead of it with a market cap of $83 billion. Circle has been bracing for the introduction of PayPal’s new stablecoin, PYUSD, which was launched on Aug. 7.
1/ Some major news from @circle and @coinbase on the future of $USDC in this joint blog post from @brian_armstrong and I (@jerallaire). https://t.co/uHuxeRJtiI
— Jeremy Allaire (@jerallaire) August 21, 2023
The blog posts also announced that USDC will launch on six new blockchains in September and October. It did not specify the new blockchains, but USDC’s expansion onto Polkadot, Optimism, Near, Arbitrum and Cosmos was announced in September.
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Blockchain tracker Lookonchain says that the bankrupt crypto lender Voyager has deposited $85 million worth of the stablecoin USD Coin (USDC) with Circle. Lookonchain notes that Voyager has been selling assets on Coinbase and has received $84.5 million worth of USDC from the exchange in total. The embattled lender reportedly still holds $11.3 million worth […]
The post Voyager Sends $85,000,000 in USDC to Circle As Bankruptcy Unfolds: On-Chain Data appeared first on The Daily Hodl.
One under-the-radar decentralized finance (DeFi) altcoin is outpacing the overall crypto market this week as the project launches the testnet of a new payments feature. In a new announcement, cloud-focused DeFi protocol Akash Network (AKT) says it has rolled out the testnet of its Stable Payments feature, which will allow traders to settle payments using […]
The post Under-the-Radar DeFi Altcoin Outpaces Overall Crypto Market This Week Amid Testnet Rollout of New Feature appeared first on The Daily Hodl.
