Circle USDC FAQ
What is Circle USDC and why is it important and needed?
Circle USDC (USD Coin) provides a simple web app for customers to purchase and use USDC fiat tokens for payments and trading in the crypto ecosystem. USDC provides a full reserve US dollar-backed stablecoin, and is based on the open source fiat stablecoin framework developed by CENTRE.
As crypto assets have grown in their importance and adoption, it’s become vital to be able to use fiat currencies for payments and trading. A price-stable currency such as the US dollar (and similar stable currencies such as EUR, GBP, JPY, RMB, etc.) is critical for enabling mainstream adoption of blockchain technology for payments, as well as to support maturation in financial contracts built on smart contract platforms, such as tokenized securities, loans, and property.
Existing approaches have lacked financial and operational transparency, have operated in unregulated offshore jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed source technologies.
Circle USDC solves these problems by offering a solution with detailed financial and operational transparency, operating within the regulated framework of US money transmission laws, with established banking partners and auditors, and is built on an open source framework with an open membership scheme that any eligible FI can participate in (CENTRE).
Who are the initial target customers for Circle USDC?
Circle USDC initially targets two major customer segments: 1) crypto asset traders who are looking for a price-stable token to hedge in and out of trading positions and who desire high-speed and secure movement of fiat value across exchanges, and in and out of the existing fiat banking system; and 2) token creators who wish to offer new tokenized financial contracts denominated in a price-stable currency such as the US dollar, as opposed to denominating contracts in highly volatile currency assets such as ETH or BTC.
When will Circle USDC be available for customers?
We expect to release the service in the coming months. Stay tuned for more updates in the weeks ahead.
What are the customer requirements for someone to use USDC?
The Circle USDC service is available to retail and institutional customers from around the world. Customers must provide detailed KYC information. Also, based on the ERC-20 token standard, USDC can be used on any exchange that supports it and with any ERC-20 compatible digital wallet.
What are the limits on the amount of USDC tokens a person or company can purchase and use?
We haven’t yet finalized the specific limits for individual and institutional accounts. The limits will reflect the appropriate levels of weekly deposits and withdrawals for typical retail and institutional customers in the exchange ecosystem.
How is USDC used with Circle Poloniex?
Circle will make USDC available as a primary market or trading pair on Poloniex. Customers who purchase USDC tokens from Circle can transfer those to Poloniex and trade with a price-stable currency on major crypto asset markets.
Are other exchanges supporting USDC?
While we can’t announce specific exchanges today, we have received broad interest in USDC from major exchanges and ecosystem players globally. Because USDC is built on the ERC-20 token standard, exchanges can add support for this token without being members of CENTRE. Stay tuned!
What is the revenue model for Circle USDC?
Circle may charge a small fee for redeeming USDC for USD bank transfers. Exchanges that support USDC such as Circle Poloniex often charge fees for trading between tokens and crypto assets. CENTRE network members may choose to monetize fiat stablecoin tokens in different ways, however the core premise of this framework is to lower if not altogether eliminate traditional fees and time delays associated with moving value around the world.
How does USDC compare to other fiat-backed stablecoins in production?
There are several major differences.
USDC is issued using the CENTRE open source framework and membership scheme, and it will become available as an open framework that multiple companies can join as issuers. That means that other FIs can become USDC issuers (and other fiat stablecoin -- e.g. EURC, JPYC, GBPC), and that customers will be able to purchase and redeem USDC tokens in an open and interoperable ecosystem of FIs that includes crypto exchanges, consumer digital wallet companies and banks. This includes a membership governance model for issuers that ensures that they meet technical, operational, regulatory, compliance and audit requirements.
Circle’s USDC gateway provides a regulated on and off ramp that operates within the framework of US money transmission laws, with oversight from the US Treasury department, and US state banking supervisors.
Circle’s USDC gateway also provides a seamless, smooth and easy to use experience that supports funding with any bank account.
How does USDC compare to other stablecoin initiatives under development?
There are a number of different Stablecoin initiatives ranging from algorithmically-backed stablecoins to crypto-backed stablecoins to fiat-backed and hybrid projects that combine those approaches.
The CENTRE framework focuses on providing a fiat asset-backed and fiat-denominated approach to stablecoins. We believe that during this phase of the market, most market participants don’t desire a new currency, but instead want to be able to use their existing major national or global reserve currencies on top of open public chains. Customers want price-stability and the trust and regulatory framework of existing central bank money but with the openness, speed, security and global reach of crypto powered networks.
We also believe that the market wants an open architecture and membership governed model that a wide range of market participants can build-on, including crypto companies from every major currency zone in the world, leading digital wallet providers, and banks that want to take advantage of public chains for settlement.
Over time, we believe that stablecoins will evolve in terms of their backing methods, and will reflect a combination of algo and bonded backing, and include baskets of underlying currencies and assets that can provide for a true global digital currency that billions of people can use. We’re just not there today, and need to map the existing central bank money system onto this infrastructure before we can credibly take these steps toward global digital currency models.
What is CENTRE and how does Circle USDC relate to CENTRE?
CENTRE is an open source project and membership organization for using fiat stablecoins for global payments. CENTRE was formed in 2017 by Circle, and raised $20M in a private financing. Circle contributed significant intellectual property from its first 4 years of product development to bootstrap the CENTRE organization.
CENTRE provides an open source framework and a governance scheme for market participants implementing fiat stablecoins. USDC is the first fiat stablecoin implementation from CENTRE, and Circle is the first commercial issuer of USDC.
In order for a company to become an issuer of USDC, they must meet CENTRE’s membership requirements, which include being a licensed financial institution that is in good standing with its regulators, with CENTRE reviewed and approved compliance programs, and is able to provide quarterly and annual publicly audited financial statements. Additionally, CENTRE will review and audit the technical procedures and processes that the member uses for implementing the CENTRE fiat stablecoin framework.
Circle is the first member of CENTRE, and the first commercial organization to become an issuer of USDC.
More details on CENTRE can be found in the latest CENTRE whitepaper at centre.io
Membership and governance options will be published in the coming months as part of a broader rollout of the CENTRE project and protocols.
Are there any other USDC issuers today or that you can announce?
Circle is currently the first and only USDC issuer. There is a lot of interest from crypto ecosystem players, consumer fintech companies and banks for becoming issuers of USDC and other fiat tokens in different currency markets around the world.
How is this regulated?
The CENTRE fiat stablecoin technology is an open source technology. Using the technology in combination with existing fiat banking infrastructure requires that members be licensed financial institutions, such as licensed crypto exchanges, money services businesses and traditional banks.
Circle is regulated in the United States as a registered Money Services Business under US money transmission laws in all US states, as well as a virtual currency operator under New York’s BitLicense. In the UK and Europe, Circle is regulated as an E-Money Issuer.
USDC and fiat stablecoins are a new, innovative electronic money transfer technology built on public blockchain infrastructure, and present a significant advancement in global payments technology.
Who are the banking and audit partners you are using for USDC?
Circle works with multiple industry-leading global banking partners and leading public auditors and advisors, as well as top-tier insurance underwriters. Circle will share details on our banking and audit partners when Circle USDC becomes available for customer usage.
How does USDC work technically?
At a high level, customers who on-board through a USDC on-ramp, such as the Circle USDC web application, can wire funds into the system; the on-ramp then executes a series of commands with the CENTRE network to verify, mint, and validate USDC tokens, and the customer can transfer those tokens elsewhere as they see fit.
Redemption follows the reverse sequence: USDC tokens are burned when a customer visits an off-ramp such as the USDC Circle web application (or another issuer’s off-ramp), where upon successful verification and validation, funds from underlying fiat reserves will be transferred back to the customer’s external bank.
More details on the technology can be found in the CENTRE whitepaper: centre.io
How does a customer know that there are actual USD balances to match their USDC holdings?
CENTRE members who implement the fiat stablecoin framework and become token issuers are audited across several vectors: that they are in fact licensed to issue fiat electronic money, that they are in compliance with applicable laws, and they must provide publicly audited financials that include a full accounting of all balances held in fiat reserves against the reported customer balances of fiat tokens.
Circle itself is regulated as a money transmitter across the United States, which requires the company to hold 100% of customer balances in reserve. Circle is audited by a major global public auditing firm. As required by CENTRE, Circle will begin publishing its USDC-related audited financial statements on CENTRE.io after public launch.
Can multiple companies issue USDC tokens? What about non-USD currency tokens?
Yes, absolutely. By leveraging the CENTRE membership scheme and open source framework, potentially thousands of different companies around the world could become issuers of fiat stablecoins. In theory, other major USD market participants such as Square, Coinbase or Bank of America could become USDC token issuers.
Similarly, the CENTRE organization is a global scheme and members may join from any currency zone in the world. CENTRE has active discussions with market participants in some of the world’s largest fiat currency zones.
What if a customer sends their tokens to an ERC-20 wallet and loses the private keys? Can they still redeem the tokens with a USDC issuer?
USDC tokens are native digital assets, which brings significant benefits in terms of portability and open and global interoperability, but which presumes that the customer either relies on a crypto asset custodian or is comfortable managing their own private keys in a crypto wallet.
If a customer has sent their tokens into a private wallet and then loses the keys for that wallet, the funds are lost forever and cannot be redeemed with any issuer.
Can a customer send USDC tokens to any address? Can addresses be blacklisted? Who decides whether addresses should be blacklisted?
USDC tokens are ERC-20 compatible and can be used with any ERC-20 compatible digital wallet. However, the CENTRE organization does maintain a blacklist of known fraudulent or illicit addresses and has the ability to prevent tokens from being sent into blacklisted addresses. CENTRE members are required to report known fraudulent or criminal addresses to CENTRE for inclusion in a global blacklist.