Cryptocurrency wallet service and investment startup Circle has created a new cryptocurrency—the USD Coin (USDC)—which is pegged to the US dollar and backed up by physical reserves of fiat held by company.
The Goldman Sachs-backed company’s stablecoin allows the tokenization of physical currency, in a bid to serve cross-border transactions with fast settlement on a blockchain. Crucially, because the USD Coin is pegged to and matched by U.S. dollars on a one-for-one basis, its value is designed to remain stable—an important feature for institutional actors.
In a statement, Circle co-founders Jeremy Allaire and Sean Neville said that USDC would help the firm realise its vision of the future of international transactions.
“Just as HTTPS, SMTP and SIP enabled free borderless information sharing and communications, crypto assets and blockchain technology will enable us to exchange value and transact with one another in a similar way: instantly, globally, securely and at low cost,” according to the Circle executives.
Initially previewed back in May, the project has gone on to raise capital at a valuation of $3 billion, following a Series E funding round led by mining group Bitmain.
The stablecoin is distinct from other similar projects in that multiple issuers will be supported, through an open source consortium called CENTRE.
Issuers are required to hold relevant licensing and regulatory approval, but the model will allow for decentralised control of issuing USDC through consortium members.
Some 30 partners have agreed to work with the project from launch, including merchant payment service BitPay. Commenting on the project, BitPay CEO Stephen Pair said they were fully behind CENTRE and the USDC.
“BitPay has always been supportive of open source crypto communities and blockchain initiatives and likes the direction CENTRE is taking with USDC,” Pair said. “We envision a future where all digital assets and payments live on the blockchain.”
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