USDC distributor Circle Internet Financial has called for the US Federal Reserve to stop issuing its own digital dollar, claiming that such initiatives could undermine private sector solutions such as USDC.
Circle Claims No Need for Digital Dollars Thanks to USDC Token
In a letter of opinion to the Fed, the company that launched the USDC stablecoin stated that the USDC token already provides “many of the potential advantages” of a central bank digital currency (CBDC) for the United States:
“A number of companies, including Circle, have leveraged blockchain technology to support trillions of dollars of economic activity with fiat-indexed stablecoins. The Fed’s introduction of a CBDC could disrupt new innovations.”
The stablecoin industry has recently been severely damaged by the dire collapse of TerraUSD (UST), but TerraUSD, unlike USDC, was not backed by real reserves and was a kind of algorithmic stablecoin.
In its call to the Fed, Circle noted that USDC is backed by “cash and short-term U.S. government securities,” and the company regularly reassures the public about the content of these reserves:
“USDC does not diminish the dollar’s role as the world’s reserve currency, but rather supports it.”
Circle also highlighted the potential harm the digital dollar could do to traditional banking.
The banking industry also shared similar views in their letters. The company also used the following statements in its call to the FED:
“Given the pace of technological advances, it may be difficult for the Fed to create a CBDC on a technology standard that will not quickly become obsolete.”
Fed officials have repeatedly said they have no intention of making progress on a CBDC without the support of the White House and Congress.
*Not investment advice.