There’s been no shortage of difficult news to absorb in recent weeks. Digital asset values have declined sharply, many investors have incurred significant losses, and the broader economy is experiencing the worst inflation in 40 years. As a valued Circle stakeholder, we wanted to provide you with a detailed update on how the company is performing and managing through this period of market turbulence and uncertainty.
While this is a painful time for many, these corrections and retracements are a natural and healthy occurrence in innovative, fast growth industries. For Circle, this moment is an opportunity to invest and grow for the long term. It also underscores the value of the regulated, fully-reserved and transparent model that has helped maintain the stability of USD Coin (USDC) in the face of market volatility. We have endured nothing short of a major economic stress test in the digital assets industry and are growing throughout as a flight to safety plays out in the market.
Circle is in the strongest position it has ever been in financially. We raised a significant amount of money in the last year (see here and here) and established key relationships. Worldpay from FIS® announced they would become the first global merchant acquirer to offer merchants the ability to receive settlement directly in USDC, we partnered with BNY Mellon to be the primary custodian for USDC reserves, and we entered into a strategic partnership with BlackRock to explore capital market applications for USDC. Despite (or perhaps because of) the difficult market environments, we are also making important progress on our Circle Impact commitments, including partnering with New York Community Bank, among other efforts.
And USDC itself has grown significantly. It has more than doubled in circulation year over year to $55 billion (as of July 6) and facilitated almost $5 trillion in total on-chain transactions since it was launched in 2018. It has done all this amid deep market volatility and the meltdown of other projects in the industry. In the last two months alone, USDC’s circulation has grown by about $5 billion, as other stablecoins have faltered.
Our Commitment to Safety, Stability and Transparency
All of this is possible because trust and transparency are the hallmarks of our business. USDC is fully reserved with short-dated U.S. Treasuries (~80%) and cash (~20%), in US dollars held directly with leading U.S. financial institutions and custodians within the U.S. regulatory perimeter. Short-duration U.S. Treasuries are the safest, most price stable, most liquid assets available in the world - they have the highest credit rating and the deepest trading markets (trading over $650 billion each day).
The USDC reserve, which is reported as part of Circle’s financial statements, has been audited annually by a leading global accounting firm as part of Circle’s annual financial statement audit. In addition to the annual audit, Circle has published, since the launch of USDC in 2018, monthly statements of the size and composition of the USDC reserve, confirming that the reserve is at least as large as the amount of USDC in circulation, which are attested to by our auditor. We’ve continued to work to lead the industry on transparency, financial integrity and market conduct, and continue to prioritize deep regulatory and policy engagement in the U.S. and around the world.
All the choices we make about how and where we hold the USDC reserve are designed to help minimize risk to USDC holders. That is why the USDC reserves are protected by laws and regulations and are separate from the rest of Circle’s business and operations.
We are grateful to our valued Circle stakeholders and look forward to continuing to collaborate today and into the future with stability and openness.
Read more on our efforts for Transparency & Stability here