- Coinbase made a mistake by failing to clarify the backing for USD coin on its website fast enough, COO Emilie Choi said Monday.
- The crypto exchange promised every USDC was “backed by a dollar in a bank account,” but the reserves included corporate bonds.
- The stablecoin’s reserves will be cash and US Treasurys only from September, USDC’s oversight consortium said.
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Coinbase made a mistake in failing to update a promise about the backing for USD coin, the company’s COO Emilie Choi said as she welcomed a change in the cryptocurrency’s reserves.
From September, USDC reserves will be made up of cash and short-duration US Treasurys, Choi highlighted in a Twitter thread on Monday.
Coinbase ran into criticism in July over its claim that every USDC was “backed by a dollar in a bank account.”
Digital payments company Circle, which partnered with Coinbase to develop USDC, revealed in July that the stablecoin’s reserves had included commercial paper and corporate bonds since May. Those assets are susceptible to losses and less liquid than the US dollar, which could spell problems if a big wave of customers tried to swap their USDCs for fiat currency.
USDC has a market capitalization of almost $US28 ($AU39) billion and is the world’s biggest regulated stablecoin, said Choi, who also serves as Coinbase’s president.
She acknowledged Monday that the company’s language around the stablecoin’s reserves “could have been clearer.”
“When Circle shared their May report about USDC reserves in late July (which included a more diversified pool of investments for the first time) we should have moved faster to update statements like that on our website. That was a mistake and Coinbase takes ownership for that,” Choi tweeted.
USDC is moving back to a “more conservative investment profile” by the end of September, Choi noted. The Centre Consortium, set up by Coinbase and Circle to develop USDC, revealed the move on Sunday.
“Mindful of community sentiment, our commitment to trust and transparency, and an evolving regulatory landscape, Circle, with the support of Centre and Coinbase, has announced that it will now hold the USDC reserve entirely in cash and short duration US Treasuries,” it said in a blog post.
Centre said it was looking into new ways to work with the stablecoin’s community as part of a deeper commitment to transparency. Later this year, it expects to provide new opportunities for people to become more involved in governance and standards, it added.