Last October, Circle and Coinbase jointly announced the formation of the CENTRE Consortium and the launch of its first stablecoin, the US Dollar Coin or USDC. Since then, Circle and Coinbase have been working to formalize and establish the CENTRE Network: a membership-based framework and governance scheme for the development and growth of money on the internet.
We are excited to announce today that CENTRE is opening up for broader membership and industry participation. Becoming a member of the CENTRE Network gives institutions the right to issue or redeem USDC. In order to have this right, members must agree to CENTRE’s operating rules and an issuer settlement and liability framework.
CENTRE members also jointly contribute to the development of the technical standards and open source software that powers CENTRE Network protocols, which started with USDC.
To become a CENTRE stablecoin Issuer, companies must become parties to the key membership and operating rules and meet the following criteria:
- Licensing: licensed and regulated to support electronic money services, such as a bank, trust bank, money transmitter or other license that authorizes the provision of financial services in the jurisdiction(s) in which the member operates
- Compliance: meet the regulatory requirements of the jurisdiction(s) in which the member is licensed, as well as United States rules and international principles (such as those promulgated by the Financial Action Task Force, or FATF) for anti-money laundering (AML) and counter terrorist financing (CTF), as CENTRE may prescribe. In addition, members must satisfy regular third party audits to demonstrate adherence to these requirements
- Technology and Operations: meet the technical and operational requirements of the CENTRE protocols
- Custody of fiat reserves: acceptable to CENTRE’s approved reserve financial institution partners and be compliant with CENTRE’s Investment Policy
- Accounting: acceptable to CENTRE’s approved certified financial accountant and be able to meet the review and attestation requirements for reserve accounting
CENTRE Issuers have the option to generate returns on reserve assets allocated to them in accordance with the CENTRE Investment Policy. Businesses may also generate revenue by building financial products and services that utilize CENTRE stablecoins.
Since its launch, CENTRE’s USDC has grown considerably. Some of the most notable highlights include:
- Over $795M of USDC has been issued, and over $470M redeemed.
- Over $11.9B has been traded on leading exchanges such as Coinbase, Poloniex, Binance, Bitfinex, and 40 others around the world.
- Over $11.1B in on-chain transfers have been completed using USDC.
- USDC is supported across the most popular Ethereum wallets. USDC can also be used in leading DeFi services for lending, borrowing, and margin trading; many loans originated across Compound, Dharma and dYdX are denominated in USDC. Payment platforms such as Coinbase Commerce broaden the payment use case possibilities.
In a short period, CENTRE’s USDC has decisively become the top financially transparent stablecoin among regulated issuers in the world.
The CENTRE Consortium has been established with several key functions: onboarding new members, performing key compliance reviews, and administering certain key financial and accounting tasks that govern reserves and settlement flows. The Consortium and it’s members also play a vital role in governing the future technology development and roadmap for CENTRE Network protocols. As such, we’re very excited to share details about its inner workings and open the network up for new members beyond Circle and Coinbase.
The CENTRE Investment Policy
In addition to publishing a monthly public attestation of 100% reserves of fiat tokens on CENTRE.io, CENTRE members are also a party to a common Investment Policy. The Investment Policy sets out the guidelines for the safe and appropriate management of assets that back CENTRE stablecoins, including:
- CENTRE’s Board of Managers will be responsible for the governance and control framework that ensures the safety of invested USDC reserves by limiting risk and prioritizing capital preservation.
- Establishing responsibility, authority and guidelines for the investment of USDC reserves across Issuers. Guidelines will focus on assessing and limiting default risk, market risk, investment-related risks and counterparty risk. Today, CENTRE issuers mitigate these risks by investing only in highly liquid short-term US government securities or by placing reserves in high-yielding deposit accounts.
- Limiting the investment options to instruments that are approved by the Money Transmission Statutes of US States.
CENTRE envisions new open standards for money on the internet which enable money to work the same way that information and content works online — instant, global, open, and free to use and exchange. Ultimately, we foresee a global economic transformation that is made possible by programmable money. People and businesses will be able to enter into diverse economic arrangements with anyone in the world easily and safely. The global digital currency age aims to make the movement of value accessible and free for everyone on the planet so that more people and businesses can participate in economic activity and value exchange.
The first step in executing on this vision was establishing the CENTRE Consortium and building the first stablecoin, US Dollar Coin. We are now moving on to the next phases of our vision.
Support for Multiple Chains
Money needs to be open and interoperable, much like content and data on the internet. In the “age of blockchain”, that means that stablecoins need to be able to function across multiple blockchain platforms. Approaches that tie a stablecoin to one chain, especially permissioned network chains, limit the openness, reach and use cases for money.
CENTRE intends to enable coins to function across multiple chains, including both public and private chains. Chains proliferate, compete, and interoperate: some may focus on gaming and entertainment, others on decentralized finance, others on transaction throughput that is useful for consumer payments, and others still on scalable and private programmable contracts. Each chain will benefit from a common interoperable fiat stablecoin for major currencies that is anchored in a full reserve, transparent and compliant governance scheme.
CENTRE is building standards that will work with a diverse, open and heterogenous ecosystem of chains. CENTRE will enable development teams and blockchain protocol projects to build CENTRE implementations on their chains, as long as they are contributing to the CENTRE open source project. CENTRE will continue to maintain and develop its core smart contracts and node software, which will continue to be released under the MIT Open Source License, available on Github: https://github.com/centrehq.
Support for New Fiat Currencies
The first CENTRE stablecoin was chosen to be US Dollar Coin (USDC) because of the critical role of USD markets in the global crypto asset marketplace.
CENTRE will grow its fiat token support beyond the US dollar by introducing new currencies to its network. This effort spans the leading global reserve currencies, and includes adding new Issuers and reserve custodians for each of these currencies.
Over the next couple of years, we envision more and more use cases for payments, settlements, and programmable financial contracts built on stablecoins. It is vital that consumers and businesses are able to denominate and settle internet transactions using major reserve currencies. A side effect of these new use cases is that we expect stablecoins to establish new and radically more efficient and fair cross-border payments for everyone.
Building a Global Currency Token Basket
We believe that global digital currency is upon us, and that in the coming years more and more people and businesses around the world will seek to transact in a common, internet-based digital currency that is both fundamentally price stable but also reflects the dynamic and changing nature of the global macro economy.
Once a variety of currencies are supported by CENTRE’s fiat tokens, a natural next step is to imagine a new global digital currency that is backed by those reserve currency tokens, with a basket structure chosen by CENTRE but based on a GDP and Balance of Trade informed allocation. We expect Bitcoin to also be a reserve currency asset in such a basket token, as Bitcoin grows in importance as a global non-sovereign store of value.
The combination of these global digital currency tokens and open, permissionless public blockchains with smart contract infrastructure will form the foundation for a 21st century digitally-native global economy that empowers people everywhere to participate and grow value.