What is USDC Coin
USD Coin is managed by a consortium called Centre, which was founded by Circle and includes members from the cryptocurrency exchange Coinbase and Bitcoin mining company Bitmain, an investor in Circle.
USDC is issued by a private entity and should not be confused with a central bank digital currency (CBDC).
Circle claims that each USDC is backed by a dollar held in reserve, or by other “approved investments”, though these are not detailed.
The wording on the Circle website changed from the previous “backed by US dollars” to “backed by fully reserved assets” by June 2021.
The tokenization of the US Dollar into USD Coin happens in a three-step process:
- A user sends US dollars to the coin issuer’s bank account.
- The issuer uses a USD Coin smart contract to create the equivalent amount of USD Coin.
- The newly minted USD Coins are sent to the user and the substituted US dollars are held in a reserve.
The redemption of USD Coins for US Dollars follows the process listed above but in reverse.
USDC Coin Technical analysis chart