Circle CEO Jeremy Allaire will testify before the House Financial Services Committee.
The House Services Financial Committee is made up of people.
Circle told a House committee on Wednesday that the company's digital coin is backed by the US dollar and short-term government debt.
A stable coin is a type of coin that is pegged to an asset such as a government bond or a precious metal.
Jeremy Allaire, CEO of Circle, told members of the House Financial Services Committee that all of the reserves that backUSDC are held in cash and US Treasuries. He was responding to a question from Rep. Velzquez, a Democrat from New York.
Circle said it would hold all of the reserves in cash and US government treasuries. The company decided to change the composition of its reserves after an audit it released in July showed that most of the reserves were backed by cash. The company had previously said that the stable coin was a representation of a US dollar.
Circle's reserves had expanded beyond cash and cash equivalents in May 2021, according to a late August post by Centre.
Velzquez wanted to know why you were offering a stable coin that wasn't backed by currency.
"USDC has been governed by the money-transmission statutes throughout the United States, the permissible investment rules of money-transmission statutes, the same statutes that govern the $35 billion of balances of PayPal or Square," said Allaire. We've always been within the statutory requirements, and I think we've reported on that every month since the launch of USDC.
Velzquez asked the same question to Charles. Paxos has a stable coin, the Pax Dollar.
The stable coin has always been backed by cash and cash equivalents. The reason we did that is because we have a stable coin. The New York Department of Financial Services is in charge of us.
We operate through our trust company. Our token is also regulated by the primary regulator. This was a statutory requirement for us because the primary regulator sets the agreement that we can use to offer our products.
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