Circle and Coinbase announced that the stablecoin they launched 21 months ago, USD Coin, has broken the $1 billion barrier.
Working together as the Centre Consortium, the firms claimed in a July 2 blog post USDC reached that milestone quicker than any other digital dollar stablecoin. Most of that increase came on June 22, when the supply jumped from about $731 million to $920 million—rising by about one-third.
That market cap makes USDC the second-largest stablecoin, and the 18th-ranked cryptocurrency overall, according to CoinMarketCap.
“Global stablecoin growth is being driven by multiple factors,” Centre said in its statement. “At a macro level, the financial crisis caused by COVID-19 has resulted in currency volatility across many developing economies. Demand for digital dollars that are fast, global, secure, and inexpensive has increased significantly as a result.”
Beyond the perilous state of the economy, Centre noted that mainstream businesses, particularly in the financial sector, are growing comfortable with digital assets that are far cheaper and faster than current means of making cross-border payments. In addition, there is growing use of USDC in the booming distributed finance (DeFi) industry.
The growth is a welcome piece of news for Circle, which has been hammered by layoffs and shedding other lines of business to focus on USDC over the past 12 months. This include spinning off Poloniex to Tron just two years after paying $400 million for the exchange. Circle also sold its Circle Trade over-the-counter (OTC) desk to Kraken, and shuttered Circle Pay, its social payments app.
A piece of good news came in March, when DeFi firm MakerDAO controversially added centralized USDC to the list of cryptocurrencies it accepts as loan collateral.
Then last month, Centre announced that Ethereum-based USDC, an ERC-20 token, was adding support for other blockchains. Algorand was the first to join.
In addition, USDC has benefitted from the adoption of USDC by lending DeFi Compound, which allows lenders to lock USDC—among other cryptocurrencies like Ether, Tether and Dai—in exchange for interest-bearing cTokens such as cUSDC, cETH, cUSDT, and cDai.
Still, USD Coin remains far behind Tether, which currently has a market cap of about $9.2 billion on CoinMarketCap. Tether recently surpassed Bitcoin Cash (BCH) and XRP to take the overall third position, behind Bitcoin and Ether.
Of course, Circle can point to monthly audits of the U.S. dollar reserve backing USDC by Grant Thornton, one of the top 10 accounting firms in the world.
Tether, on the other hand, is notably lacking such an audit, and is still battling a fraud lawsuit by the New York Attorney General. That was a result of Tether loaning its sister company, the Bitfinex exchange, more than $700 million after a con man diverted more than $880 million. That left Tether short of the one-to-one, U.S. dollar-to-USDT match it had long advertised. That loan has long since been paid back, Tether has said. Then there are the class action lawsuits accusing it of market manipulation.