[jdoliner]

Does Circle keep enough dollars on hand to buy back every USDC? Or do you run a fractional reserve? How much money is that total? What do you do if you have as many USDCs in circulation as you have dollars? Stop issuing them?

[anders94]

Circle holds one dollar for every dollar minted, we do not run a fractional reserve. The CENTRE Consortium holds minters (of which Circle is one) to strict auditing requirements. While this information is regularly published, you can see all minting and burning operations (as well as all transfers and other token operations) in realtime on the Ethereum blockchain. See etherscan: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb... There are always as many USDCs in circulation as there are fiat dollars backing them up in traditional bank accounts. The only way minters produce more in a 1 to 1 manner is if someone wires traditional dollars in. Likewise, Circle will burn USDCs in a 1 to 1 manner as requests for traditional fiat dollar withdrawals are processed.

[jdoliner]

Thanks for the quick answer, this all makes sense. Does this get limiting at all, in terms of wanting to mint new coins and not having the capital to do so?

[anders94]

It isn't limited like that.

As you can imagine, Circle maintains fairly sophisticated minting operations able to execute around the clock. All that is necessary for coins to be minted is for Circle to broadcast a properly signed transaction.

Now, of course, Circle can't just mint a limitless supply because we have a minting allowance set by CENTRE. While CENTRE itself can't mint coins, they do operate a minting allowance system with around the clock availability which can grant Circle a additional allowance per a ruleset to effectively manage risk.

This might seem to be getting into the weeds a bit but support for multiple minters (Circle and Coinbase here for example) is a significant differentiator between USDC and other reserve backed stablecoins.

[minderasure]

That's like saying isn't it a bummer I cant just print money out of thin air to buy stuff. The whole point is to give people faith and trust in the stablecoin exactly because thie issuance process relies on locking up 1 USD.

[negaex]

It's worth noting that in the future, Circle may also invest these fiat funds in highly-liquid, AAA-rated fixed income securities. [0]

[0] https://support.usdc.circle.com/hc/en-us/articles/3600152783...