Circle has revealed that it hired Grant Thornton LLP, an accounting company, to confirm its claim that each and every unit of its USDC tokens is backed with the equivalent unit of a dollar in its reserves in its bank account.
The USDC is a stablecoin pegged at $1 allowing for people who want to venture into the crypto world enjoy the benefits of cryptocurrency without its price fluctuations and mass volatility. The company behind the stable coin plans on doing these verifications monthly. Apart from Circle, Paxos Standard also organizes verifications similar to this every month.
The Amount of Dollar Reserves Backing USDC Supersedes its Token Supply
The accounting firm contacted, Grant Thornton LLP has found out that Circle possesses a $4,000 surplus in their reserves. Their report stated that as of 31st of October, 2018, the number of USDC tokens issued amount to 127,408,827 USDC, and the amount of USD backing these tokens amount to $127,412,240.89. In the report, it was noted by the accounting firm that their assessment was in line with accounting standards.
They said that the assessment followed the requirements of the American Institute of Certified Public Accountants. The requirements necessitate the planning and performance of the review to be able to fully determine whether the information made public by any company is actually accurate. The reviews are performed to ascertain the truthfulness and accuracy of the claim made by the firm. The time the reviews are conducted, its nature and the extent to which it is performed rely on their judgment, and an assessment of the risks of in case of wrong information relayed to the public, whether it was as a result of fraud or error.
They further stated that the claims made by Circle are accurate. According to their report;
“In our opinion, the Reserve Account Information in the accompanying Reserve Account Report as of October 31, 2018 at 11:59 PM UTC is correctly stated, based on the criteria set forth in the Reserve Account Report, in all material respects.”
Similar Verifications Performed by Other Stablecoins
Apart from USDC and Paxos Standard, Gemini Dollar, the Winklevoss twins-founded stablecoin developed on the Ethereum blockchain for low-cost international transactions also regularly does a check on its reserves to release financial information to the public. Their most recent report was published 31st of October.
The periodical checks by these third-party firms serve to reassure the investors that their investments aren’t tampered with, as an accounting firm cannot make untrue statements and will totally verify every financial information stated by the company. This allows for ease of auditing when finally, external bodies need verification of the company’s financial statements. The fact that all three new stablecoins, Paxos Standard, USDC, and Gemini Coin are all regularly performing checks on their account reserves, is financially superb and might be a standard set for coming stablecoins in the future.