USDC is currently the second-largest stablecoin by market share (25.18%), trailing only USDT (62%). While not the oldest stablecoin, USDC stands out as the first fully compliant stablecoin. Its stability and regulatory backing have boosted its adoption and liquidity in crypto markets.
This article explores USDC in depth, including breaking news: Visa’s integration of USDC payments.
What Is USDC?
USDC (USD Coin) is a fiat-backed stablecoin pegged 1:1 to the US dollar. It’s issued by Centre Consortium, a joint venture between Circle and Coinbase.
- Mechanism: When you buy 1 USDC with $1, the dollar is held in Centre’s reserve. Conversely, redeeming 1 USDC burns the token and releases $1.
- Transparency: Circle publishes weekly reserve reports. As of now, $61.4 billion USDC are in circulation, backed by $61.5 billion in reserves.
👉 Discover how stablecoins like USDC revolutionize payments
How USDC Maintains Its Peg
- Price > $1: Arbitrageurs sell USDC for dollars, pushing the price down.
- **Price < $1**: They buy discounted USDC and redeem it for $1, lifting the price.
This self-correcting mechanism ensures USDC stays at $1.
Key Features of USDC
1. Regulatory Compliance
- Circle and Coinbase are U.S.-regulated entities.
- Circle holds licenses from FinCEN and state regulators.
2. Monthly Audits
Unlike USDT’s opaque audits, USDC’s reserves are verified monthly by Grant Thornton LLP (Audit Reports).
3. Fast Transactions
Built on Ethereum, USDC enables cheap, rapid transfers—unlike traditional bank wires.
4. Cash-Only Reserves
USDC’s reserves are strictly cash or cash equivalents, avoiding risky assets.
Top 5 Uses for USDC
- Lending: Collateralize USDC to borrow other cryptos.
- Payments: Spend without volatility (e.g., Visa transactions).
- Fundraising: Nonprofits use USDC for stable global donations.
- Earning Interest: Platforms like Binance offer up to 8% APY.
- Hedging: Preserve value during crypto market downturns.
Risks of USDC
1. Simplified Audits
Reports lack granular detail, raising minor transparency concerns.
2. Reserve Composition
Exact asset types aren’t fully disclosed.
3. Bank Failures
Example: In March 2023, USDC briefly depegged to $0.92** when $3.3B reserves were stuck in Silicon Valley Bank (SVB)**.
👉 Learn how USDC compares to other stablecoins
Visa Adopts USDC
Visa now settles transactions in USDC via Ethereum wallets, skipping fiat conversions. Crypto.com’s Visa card pioneers this feature.
USDC vs. USDT: Key Differences
| Feature | USDT | USDC |
|---|---|---|
| Issuer | Tether | Circle |
| Compliance | Controversial | Fully Regulated |
| Market Share | 62% | 25.18% |
| Transparency | Low | High (Monthly Audits) |
| Stability | Less Trusted | More Trusted |
FAQs
Q1: Is USDC safer than USDT?
Yes—USDC’s regular audits and regulatory compliance make it more trustworthy.
Q2: Can USDC lose its peg?
Temporarily, yes (e.g., SVB crisis). But arbitrage mechanisms usually restore it quickly.
Q3: Where can I earn interest on USDC?
Try platforms like Binance (8% APY) or Matrixport (5–30% APY).
Q4: How does Visa use USDC?
Visa accepts USDC for direct crypto settlements, streamlining cross-border payments.