Today Circle and the CENTRE open source consortium introduced a service to tokenize US dollars and use those dollars over public blockchains on the internet: USD Coin, also known as USDC. Individuals and institutions can enroll in this service to deposit US dollars from bank accounts, convert those dollars into tokens usable everywhere the internet reaches (subject to the token’s compliance controls), and redeem USDC tokens and cash out to bank accounts.
In addition to immediate usage on Circle Poloniex and Circle Trade, more than 20 companies are also announcing or launching support for USDC today. Other wallets, exchanges, and software applications can add support for the USDC token through the open ERC-20 standard.
Price-stable tokens are foundational requirements for enabling powerful new global financial contracts, products, and services on the internet. USDC is the first of several fiat tokens CENTRE expects to deliver, and Circle is the first of several forthcoming CENTRE members to launch USDC issuance.
When we founded Circle five years ago, we and many in the crypto community envisioned fiat money and financial contracts executing on top of distributed public network infrastructure, building on open standards that would allow us all to share value as instantly and easily as we can access content in web browsers and exchange messages in email and messaging apps. Just as HTTPS, SMTP and SIP enabled free borderless information sharing and communications, crypto assets and blockchain technology will enable us to exchange value and transact with one another in a similar way: instantly, globally, securely and at low cost.
A fundamental building block of this vision is the tokenization of fiat currency itself, through what are now referred to as fiat stablecoins. A safe, transparent and trustworthy layer for fiat to operate over open blockchains and within smart contracts is a necessary precondition to the broader and more revolutionary potential of a crypto-powered global economy. USDC aims to meet this need.
CENTRE’s open distributed approach
This market infrastructure succeeds only if it is a base layer that we can all use and build upon, and which no one issuer can centrally control. Because of the critical need for openness and interoperability, Circle helped to create CENTRE, an emerging consortium that is defining standards and policies for fiat stablecoins as well as enforcing a governance scheme for issuers of CENTRE-enabled technology. USDC is the first release of technology developed by CENTRE, and more information about CENTRE’s USDC contract is available on the CENTRE blog.
USDC is built on openness and accountability, enshrined in the governance and technology standards effort of CENTRE. Commercial issuers of USDC are required by CENTRE to:
- Be licensed to handle electronic money, such as banking, money transmission or trust charters
- Have audited AML and Compliance programs that meet FATF standards
- Back all tokens on a fully reserved basis and provide monthly published proof of reserves attested to by certified public auditors
- Support fungible exchange and redemption of USDC tokens from other authorized issuer members
- Meet other reporting and review requirements established by CENTRE
While Circle may be the first USDC issuer, we will certainly not be the last. Leveraging $20m in funding raised last year, CENTRE is launching its broader membership framework which includes other established financial technology firms as additional issuers. Over the coming weeks, CENTRE will share more about these other members beyond Circle.
We believe that an open internet of value exchange can transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more efficient and inclusive global marketplace that connects every person on the planet. The future of the global economy is open, shared, inclusive, far more evenly distributed, and powerful not only for a few chosen gatekeepers, but for all who will connect.
This vision relies upon an open standards model for fiat money on the internet, which is emerging now with broad industry support behind USDC. The potential is immense, and we are excited to be part of this next step.
Sean & Jeremy
Originally published at blog.circle.com on September 26, 2018.