Circle has developed a Crypto token that has been pegged on the value of the dollar and that is backed by the physical fiat currency held in the numerous bank accounts owned by the startup. The firm is a current startup that is being backed by Goldman Sachs, an investment giant.
Open Source Consortium
The announcement which was made on Wednesday stated that the fiat backed currency, USD coin (USDC) will enable the tokenization of the US dollar which institutions and individuals could then use when transacting across borders for a speedy settlement.
In their statements on the new product, the firm’s co-founders Jeremy Allaire and Sean Neville said that upon the founding of circle five years ago, many within the Crypto sector were looking forward to the development of fiat currencies and financial contracts which are based on the infrastructure on the distributed network. They added that in the efforts to build open standards that would ensure the instant sharing of value on a network that can be as easy to access as the web browsers, digital assets and their underlying technology, Blockchain have made it possible to not only exchange value but to also transact in a way similar i.e. at a low cost instantly and in a secure way.
Different from all other Crypto assets that are backed by the USD, USD Coin will not only be issued by Circle. In the near future, more other issuers will come on board to issue USD Coin especially with more organizations joining CENTRE. CENTRE is a fiat Stablecoin consortium that was created to come up with a decentralized network that is open source.
USDC Smart Contracts
According to the guidelines of the CENTRE organization, issuers of the USDC will be required to be in the possession of regulatory licenses giving them the authority to deal with electronic money, have anti-money laundering and compliance systems that have been audited as well as proof that the USD backed tokens indeed do have corresponding reserves in bank accounts.
The USDC has been based on the Ethereum network designed as an ERC-20 token. According to the CENTRE organization, this token uses a smart contract that is Ricardian meaning that the consortium has the opportunity to change its code in the event that an issuer has failed to fulfill the expected obligations.
This token will be featured on Circle’s Crypto exchange, Poloniex, and has been said to be in line to replace Tether eventually.
A Replacement For Tether
The USDC has joined the ever-growing number of USD pegged Stablecoins looking to replace the controversial Tether. Tether (USDT) currently stands as the most dominant digital coin backed by the US dollar. Within the last month, two other Crypto exchange operators have unveiled their own Stablecoins. Gemini and Paxos have both launched their Stablecoins under the watchful regulation of the DFS (Department of Financial Services) in New York.
In his interview with Business Insider, Allaire mentioned that the Crypto exchange the firm acquired, Poloniex, will be looking to replace Tether with the USDC. He, however, did not say when this would be happening.