We have mentioned before that with the advent of comprehensive regulations in the Canadian cryptocurrency industry, there are certain coins that investors may no longer be able to freely trade on traditional platforms. USD Coin (USDC) is fortunately not one of them, and this bodes well for investors who are keen on expanding their portfolio into the stablecoin market. Stablecoins have commanded a significant portion of the cryptocurrency industry’s market capitalization in recent years as they represent an accessible first step for investors who may be hesitant on diving directly into crypto. In this article, we’ll be taking a look at some of the important aspects of this USD Coin and how you can utilize VirgoCX Wealth to get to trading it yourself.
Understanding USD Coin
USDC, like USDT, is a stablecoin that holds a 1:1 value with the United States dollar. While Tether is notable for some scrutiny behind its backing, USDC holds its value by having every coin in circulation backed by a real-world US dollar in reserve. This is achieved with a mix of cash, short-term US treasury bonds, and other assets – more on this later. It also has some considerable firepower behind it; launched in 2018, USDC was conceived as a collaboration between Coinbase and the payments giant Circle, collectively known as the CENTRE consortium. It is important to note here that USDC is thus issued by a private company and not the United States government, and while it has some claims to robust backing, there is no real support from the US Treasury or other federal institutions.
What most would consider USD Coin’s defining characteristic, however, is its transparency. USD Coin asserts that there is US$1.00 for every single USDC, and “these funds are held in a special bank account that is constantly monitored and audited.” Circle itself is an official Money Transmitter, meaning that the US Government licenses them to provide money transfer services and payment instruments. As a US-licensed entity, this also means that they have a further obligation to abide any laws and regulations, ensuring potential investors there is minimal risk to misuse of the coins or
their funds as the company is fully regulated.
Additionally, while other stablecoins have come under flak for being disingenuous about their audit history, USD Coin is well-known for the openness about their finances. Grant Thornton LLP, one the largest accounting firms in the US, provides monthly attestations on the coin’s reserves; these reports are publicly viewable online.
In terms of technological security, USDC tokens are actually ERC-20 tokens, meaning that they are built on the Ethereum blockchain. While perhaps not the most efficient network, at least until the much-anticipated release of Ethereum 2.0, many would consider this a boon for the coin as the network has, by all accounts, shown outstanding security. Again, this is considerable for investors looking to add USDC to their portfolio as it gives them reassurance that the risk of a security breach is minimal.
Outlook
Stablecoins like USDC provide investors a way to enter the cryptocurrency market without overtly worrying about things like volatility, which have historically affected traditional cryptocurrencies more severely. Additionally, traders are able to use stablecoins as a way to offload earnings made from trading traditional digital assets like Bitcoin or Ethereum without exiting completely to fiat. For a coin like USDC, the benefits are plentiful. Along with the transparency of the coin, which can assure investors of the coin’s backing.
Although there are a broad range of factors that make USDC appealing for investors as perhaps one of the safest stablecoin options out on the market, that is not to say it is without its flaws. Particularly, while Circle has gone through great lengths to be completely transparent with their reserves behind USDC, there have been several instances where there have been major inconsistencies with the state of these reserves and the language that Circle has used to describe them.
We mentioned earlier that the coin’s reserves are backed by cash, short-term treasury bonds, and other assets; USD Coin came under some serious flak last year due to them previously saying that every coin was backed by a US dollar in a bank account. They faced criticism when they had made a decision to also including a “diversified pool of investments” to the backing reserves, and USD Coin president Emilie Choi even admitted that their language could have been clearer.
The attestations of these reserves by Grant Thornton have also faced scrutiny. While you are able to find and view the reserve attestations online now and as recent as March 2022 at the time of writing, there was a period of time last year when these attestations were coming late – and eventually not at all. This brought with it major doubt on the actual transparency of USD Coin’s reserves, particularly as it was timed with an exponential increase of the coin’s price. More recently, Grant Thornton has changed the language that they used to describe the attestations – albeit subtly – from being “correctly stated” to “fairly stated,” to match Circle’s rhetoric when describing their reserves.
It should be noted that Circle has since began the process of reverting back to completely backing the reserves with cash and cash equivalents, and that their monthly attestations are now fully viewable up to the most recent month of March 2022 at the time of writing. USD Coin is still one of the few stablecoins that have taken greater measures to ensure transparency for investors looking for a true, dollar-backed stablecoin.
Using VirgoCX Wealth to begin trading USDC
VirgoCX Wealth clients have the advantage of being able to procure large amounts of USDC with ease. There are two ways that you can purchase USDC through VirgoCX Wealth: instantaneously with our new OTC Direct platform or through one of our personalized chat brokers.
If you are not familiar with how to use OTC Direct, you can find a great guide on it here. OTC Direct allows you to complete large block transactions of over CA$30,000 instantaneously, anywhere in the world, 24/7. It looks and functions like a traditional retail platform, allowing you to seamlessly transition from one platform to the other. And, just like the retail platform, there are no trading fees.
Those who would like a more tailored experience can utilize the tried-and-true method of getting in contact with our chat brokers. They can contact you on whichever method of communication suits you best, and they will be with you every step of the way to ensure that your transaction is as headache-free as possible.
VirgoCX Wealth offers support for a multitude of international currencies like EUR, AUD, and GBP, ensuring that regardless of where you might be in the world, you won’t have to worry about losing out in any of your business ventures.
To get started using VirgoCX Wealth, you can access both the OTC Direct platform and our personalized chat brokers here.