Circle is creating a virtual version of the USD, aiming to be an improved and more transparent alternative to current stable coins like Tether.

Circle, a growing fintech company called, is planning to release a new cryptocurrency focused on low volatility and is thus pegging its new currency to the US dollar. The new digital coin is aptly named USD Coin (USDC). In an investment round led by Bitmain, a major Chinese crypto mining company, Circle raised $110 million dollars for their new project.

It is likely that USD coin will threaten Tether (USDT), a popular currency pegged to the US dollar. This is because Tether has been accused of many shady practices, most notably their non-transparency about whether or not each USDT is actually backed 1:1 by the US dollar.

Circle is backed by Goldman Sachs, which may lead crypto investors to believe their digital USD is safer in the new USD coin.

Existing fiat-backed approaches have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies,” writes Circle in their announcement. “Circle USDC addresses these problems by providing detailed financial and operational transparency, operating within the regulated framework of US money transmission laws, and reinforced by established banking partners and auditors.

USD Coin will be initially offered on Poloniex, a crypto exchange acquired by Circle in February. The USD coin will run on Ethereum’s blockchain.

USD Coin seems very comparable to Venmo, a free digital wallet where Americans can easily make payments to friends with digital USD. It will be interesting to see if USD Coin can gain enough popularity in America to rival Venmo. Hopefully, an improved and transparent alternative to Tether will bring more investors into the cryptocurrency space from the sidelines.

LEAVE A REPLY

Please enter your comment!
Please enter your name here