The Path Forward For Blockchain-Based USD Beyond The Crypto Space Remains Unclear

June 16, 2021 04:00 PM
Crypto Story of the Day

Crypto Story of the Day




Crypto was marginally lower to unchanged this morning. Spot volumes are roughly half the 30-day average. 

Crypto Story of the Day

In May, Circle, the firm behind the USDC stablecoin, revealed having raised USD 440 million. USDC has added about USD 19 billion to its market cap since the beginning of the year.

The USDC stablecoin was launched in 2018 by Centre, an organization formed by Circle to govern future stablecoins. Later that year, the organization was joined by Coinbase before the exchange listed the token. In announcing the listing, Coinbase wrote the “underlying technology behind the USDC was developed collaboratively between Coinbase and Circle…” 

Since then, the coin has been listed on Binance, Kraken, Poloniex, and several DeFi venues. 

In 2019, Coinbase announced that trading of USDC was available in 85 countries. The stablecoin was originally built on Ethereum, but has expanded to the Algorand, Stellar, and Solana networks. The vast majority of the coin’s USD 23 billion market cap is deployed on Ethereum. 

In 2020, Circle announced that business clients could sign up for a suite of APIs and development tools that facilitate the coin’s integration with applications. Circle’s CEO Jeremy Allaire described the offering as easing the integration of traditional banking infrastructure in order to deploy “dollars to the internet…’

In March this year, Visa revealed it’s piloting settling transactions using the Ethereum-based USDC. Circle’s USD 440 million raise— considered to be the largest private capital raise for a crypto firm— included contributions from Fidelity, Marshall Wace, Digital Currency Group, and FTX, among others. 

According to crypto media outlets, Circle is planning to go public via a SPAC deal at a reported USD 4 billion valuation. Google search data shows users who searched for "usdc" also most frequently searched for other crypto-related topics. At the beginning of the year, outstanding USDC debt in DeFi totaled USD 720 million and has since grown to USD 5.2 billion (See Chart of the Day). 

Circle has positioned USDC as a “digital dollar” that answers the needs for accessible, low-cost payments and has pushed back against plans to launch a central bank digital currency in the U.S.

Despite Circle having positioned the stablecoin as a “digital dollar,” USDC uptake has been most pronounced in DeFi and relatively muted for non-crypto purposes. As such, the uptake of USDC for non-trading purposes remains unclear and is tepid at best.

Stablecoins outside of the crypto ecosystem have a number of competitors offering more traditional digital solutions, such as Cash App, Venmo, and Interac. The path forward for blockchain-based USD beyond the crypto space remains unclear.

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