Circle Internet Financial Ltd., one of the leading companies in the crypto world, behind the stablecoin denominated USDC, which is pegged 1 to 1 to the dollar. Referencing the volatility of Bitcoin, he has prepared an alternative for legions too conservative to follow the likes of Elon Musk and Jack Dorsey on Bitcoin.
“Park your extra money in USDC and earn up to 7% annually through high-yield accounts. More than 10 times the yield of a Treasury bill, ultra-secure at 1 year ».
Bitcoin volatility creates an alternative
In this regard, the idea of Circle may be interesting to some, who were initially seduced by the large profits. Especially after Bitcoin’s roughly 40% decline since mid-April.
In fact, Stablecoins such as USD Coin (USDC) are gaining more and more attention. Due to its ability to maintain its parities during wild cryptocurrency price fluctuations.
Stablecoins like #USDC have become an essential tool for institutional traders and market makers within the #crypto ecosystem. See how some of the most important market participants are increasing speed and security with infrastructure from @circlepayhttps: //t.co/r5RxSGY9bF
– Circle (@circlepay) May 25, 2021
Still, not all long-term digital market watchers are satisfied. According to John Griffin, professor of finance at the University of Texas at Austin, said: “If companies want to put their Corporate reserves in a stablecoin and that is fully audited. It’s like putting your money in a bank account, which is what they normally do.
In addition, he added: “However, if the account is paying a higher return than the bank account returns, then you are not simply investing in some risk-free asset.”
About USD Coin
In this regard, USDC is a stablecoin anchored to the price of the US dollar in a 1 to 1 ratio. For each unit of USDC there is 1 dollar in storage, combined with cash reserves and short-term US Treasury bonds.
Likewise, it is designed in order to fulfill the role of digital money. In the digital age that we are living in, where transactions using cash are becoming less common.
As a curious fact, since its launch in 2018 it has been gaining ground and use cases, going beyond a simple tool for those seeking to take refuge from the volatility of cryptocurrencies.
How does the Circle program work?
The treasurers would open an account in digital dollars. Where the company’s fiat money is converted into USDC and interest is paid in USDC.
Most importantly, the return is generated when Circle lends the digital dollars to a network of institutional investors. That they are willing to pay an interest rate to access additional capital.
Also, companies would block your return when the account is opened. Circle plans to supply accounts with maturities ranging from one month to one year, with no early withdrawals allowed. Available rates will be updated weekly based on USDC loan demand.
In the same vein, Jeremy Allaire, CEO of Circle, said: “The service will be available for the first time in the United States and Switzerland. And it will be released imminently. We see the opportunity for the treasury use case grow a lot. “
Are there offers similar to Circle’s, for Bitcoin volatility?
To recall, on May 26, the Gemini Exchange, the brainchild of the Winklevoss brothers, said that investors can earn up to 7.4% annually in Gemini dollars. Through a program called Gemini Earn.
The Gemini token is also pegged to the dollar. And your reserves are held at State Street Bank and Trust.
In closing, with few non-crypto companies following MicroStrategy, Tesla, and Dorsey Square Inc. on Bitcoin, Circle hopes that Stablecoins will be the next logical step. Do you agree with Circle’s alternative? Leave your opinion in the comment box.
I say goodbye with this phrase from John C. Maxwell: “Success is knowing your purpose in life. Grow to reach your full potential. And plant seeds that benefit others.