Read the latest update on Circle’s reserve attestation, which shows that USDC’s backing exceeds its circulating supply.
Frequently Asked Questions
Here is a list of FAQs about Circles reserve attestation and USDC ranging from beginner to advanced
Beginner Questions
1 What does USDC is backed by assets exceeding its circulating supply actually mean
It means that for every USDC dollar in circulation Circle holds more than one dollars worth of real assets in a bank account The exceeding part means there is a little extra buffer so the value isnt razorthin
2 Why does Circle publish a reserve attestation
To prove to the public that they arent making up USDC out of thin air Its an independent check by an accounting firm to confirm that the money backing your USDC is actually there and safe
3 Is an attestation the same as an audit
No An attestation is a snapshot report that confirms the numbers at a specific moment in time It checks that the assets match the liabilities A full audit is a much deeper investigation of internal controls and processes over a longer period
4 Does this mean my USDC is 100 riskfree
Not exactly It means the reserves are fully collateralized and highly liquid However it doesnt protect you from crypto market volatility if you trade USDC for another coin and it doesnt cover risks like fraud at the custodian bankthough these risks are considered very low
5 Who checks the numbers
Circle hires a thirdparty accounting firm to review the reserves and issue the attestation report
Advanced Questions
6 What specific assets make up the excess beyond the 11 backing
The reserves are primarily held in US Treasuries and cash held at regulated financial institutions The excess is usually just the interest earned on those assets that hasnt been paid out yet which accrues and stays in the reserve pool
7 Why does Circle hold more than 100 instead of just exactly 100
It acts as a safety buffer If there is a tiny lag between someone minting USDC and the cash actually settling in the bank account the excess ensures that the reserve ratio never accidentally dips below 100 due to timing differences