One of the largest and most well-respected accountancy firms has provided an independent third-party attestation with regard to USD backing for the Circle stablecoin (USDC). Grant Thornton LLP is also set to release monthly attestations for USDC according to the firm. Circle’s USDC launched on September 26th with the promise of transparency, which it seems to be delivering on.
Grant Thornton LLP: USDC backed up with USD
Stablecoins typically promise stability, so that one unit of the stablecoin is equal to one US Dollar (or some other currency equivalent). To do this, it is necessary to back up the stablecoin with an equivalent amount of US Dollars. Circle has provided this with an independent third-party attestation. According to Grant Thornton LLP –
“In our opinion, the Reserve Account Information in the accompanying Reserve Account Report as of October 31, 2018 at 11:59 PM UTC is correctly stated, based on the criteria set forth in the Reserve Account Report, in all material respects…[the examination] was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants.”
This is an attestation, not an audit, but is certainly a step in the right direction. An audit is more thorough than an attestation, which sets out to prove a certain goal, in this instance that the USDC stablecoin is, in fact, backed up by US Dollar reserves. The attestation states that there is an equivalence of US Dollars to match the circulating supply of USDC.
Competition in the stablecoin market
With the controversy surrounding the Tether stablecoin and it’s difficulting in maintain dollar parity for prolonged periods, other stablecoins have been launched onto the market. These include TrueUSD (TUSD), GeminiUSD (GUSD), and Paxos Standard (PAX). These are what are known as fiat collateralized stablecoins.
However, there are a number of other innovative stablecoins being launched, such as Maker DAO, which is crypto collateralized using ETH. There are also algorithmic stablecoins which do not require any kind of audit, third-party attestation, or collateralization. Smart contracts are used to maintain parity between two assets. An example of this kind of stablecoin is the MAI, launched by SovereignWallet Network. These stablecoins are one step removed from third-party approval and are closer to pure decentralization. But like all stablecoins and most crypto assets, they are untested in a real-world scenario. As brilliant as the algorithm may be, there could be external factors that it cannot account for until it is unleashed into the marketplace.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.