USDC is built to always be redeemable 1:1 for the U.S. Dollar. It is a true bearer asset (like the cash in your pocket, but in digital form), capable of self-custody and transferrable to anyone, anywhere, at the high speed and low cost of the internet. It is imbued with the potential to transform financial services – lowering costs and increasing utility for billions of users.
A U.S. dollar backed stablecoin requires access to the U.S. banking system to allow money to seamlessly flow in and out of crypto, enabling the safe, secure bridges between blockchain-based finance and fiat banking that are essential to the long-term growth of digital assets. We have spent years building our banking relationships, financial infrastructure and a regulation-first approach to operating USDC and managing the reserve.
The USDC reserve is held ~80% in short-dated U.S. Treasuries and ~20% in cash deposits within the U.S. banking system. The reserve is fully transparent and subject to third party assurance that there are sufficient assets to meet liabilities. It does not contain any other assets of different risk profiles.
Short-dated U.S. Treasuries carry the full faith and credit of the United States, and are the most liquid assets in the world. The Treasuries in the USDC reserve are held in an SEC-regulated, wholly-owned, government money fund structure. They are not subject to any lock-ups or redemption gates. There is daily independent, third-party reporting on this portfolio, down to each individual security.
We hold ~20% of the reserve in cash to satisfy the immediate liquidity needs of our customers. Circle, like every institution, relies on a safe, well-regulated commercial banking system to house those cash reserves and facilitate customer liquidity. Following multiple recent bank failures, Circle has taken steps to reduce risk from the banking system by now holding substantially all of the cash portion of the reserve at one of the world’s 30 global systemically important banks, also known as a GSIB. GSIBs are widely recognized as the safest banks, with the highest capital, liquidity and supervisory requirements in the world. We also hold modest funds at our transaction banking partners in support of USDC liquidity operations.
We have always aspired to hold the cash portion of the USDC reserve directly with the Federal Reserve, fulfilling our vision of USDC as true tokenized cash. To do so will require stablecoin legislation. Since Circle’s founding in 2013, we have been at the forefront of calls for federal regulation of the digital asset industry, and we are optimistic that Congress will act.
The USDC reserve is held in segregated accounts for the benefit of USDC holders. By law and regulation, Circle cannot use the USDC reserve for corporate purposes. In the unlikely case of a Circle bankruptcy, the USDC reserve would remain segregated for USDC holders and would not be part of the bankruptcy estate. In the unlikely case of any reserve deficit, Circle stands behind USDC and its obligations to USDC holders, with all its corporate resources (current corporate cash is in excess of $800 million and Circle is a profitable business), and with external capital if necessary.
Further details on the USDC reserve, our minting and redemption activity, and links to third-party monthly attestations are here.