the staff of the Ridgewood blog
Ridgewood NJ, Circle has announced its intention to become a fully regulated bank. Its aim is to become a narrow bank that places all deposits on reserve at the central bank. If this were achieved, USDC would become a cryptocurrency fully backed by the Federal Reserve. Circle would profit off the interest that the Fed pays on bank reserves. Previous attempts by other companies to do narrow banking in the US have failed as the Fed doesn’t like the idea. Circle has yet to initiate the process of applying to be a bank.
As previously reported on the Ridgewood Blog an audit found that USDC’s reserves were not fully backed by US dollars held in a bank account. Coinbase’s USDC page now states that each USDC is backed by one dollar or asset with equivalent fair value.