The volatile nature of pioneers in the crypto market like bitcoin (BTC) could lead to their replacement on corporate balance sheets.
With price fluctuations resulting in low returns for corporate treasurers, they are looking for an alternative. An alternative in the form of the USD Coin (USDC) stablecoin. According to Bloomberg, Circle Internet Financial Ltd., one of USDC’s leading developers, has offered an alternative for companies looking to have a hand in the crypto space but are reluctant to take the precarious avenue of BTC.
The proposal asserts that companies can invest their savings in USDC and earn up to 7% interest per year when placed in a high yield account. Reports say that figure is more than ten times the expected return on a one-year treasury bill.
Specifically, corporate treasurers will open a special account in which fiat money will be converted into USDC. Subsequent interest is therefore paid in USDC. Meanwhile, Circle lends the funds to a network of investors willing to pay an interest rate, which in turn generates the return.
The attraction of stable coins
Stable coins like USDC have their value linked to that of another reference. Like, in the case of the USDC, the US dollar, with which it is pegged 1 to 1. With this in mind, they are not as prone to price fluctuations, nor as vulnerable to crashes or market corrections as other cryptocurrencies.
During the recent crypto price crash on May 19, the price of BTC fell to an all-time high of $ 30,000 from the already low $ 43,000. The USDC, on the other hand, experienced only minor fluctuations. Just like its rival in the ranking, its compatriot Stablecoin Tether (USDT).
Both tokens hit milestones in the days following the price drop, with the USDT surpassing its market cap by $ 60 billion. USDC, meanwhile, was among the 10 largest cryptocurrencies by market cap. He placed 10th on May 24 and has been climbing steadily since. At the time of going to press, data indicates that it now ranks 8th, with a market cap of over $ 22 billion.
The circle makes history
It has been a positive week for Circle this week. On May 29, reports revealed that they had secured a $ 440 million investment round. The biggest investment in the history of crypto, as reported by Forbes. This multi-million dollar deal broke Bitmain’s record, held since 2018, when they acquired $ 422 million in their B1 series.
Circle CEO Jeremy Allaire exclaimed about investing in a thread of tweets, shared May 28.
“We are delighted and honored to support and partner with these great investors, and delighted to continue to build a sustainable institution that we believe can help transform the global financial system on the basis of the open internet.”
He also revealed that the funding would be used “to accelerate our growth and market expansion.”
âThis follows an extraordinary growth in uptake of USDC and an acceleration of all of our activities.
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