Circle has announced that it has contracted an independent accounting firm, Grant Thornton LLP, to verify through attestation reports the dollar reserves thaCirclece maintains to back the USDC token. Circle joins Paxos Standard in doing this on a monthly basis.
According to the findings of Grant Thornton, Circle actually has about $4,000 more than it has issued in tokens in its accounts backing USDC. From their post:
The report states that as of October 31, 2018 at 11:59 PM UTC:
- USD Coin (“USDC”) tokens issued and outstanding = 127,408,827 USDC
- US Dollars held in custody accounts = $127,412,240.89
Grant Thornton notes that they have conducted their review in accordance with standards of accounting. From the report itself:
Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Reserve Account Information in the accompanying Reserve Account Report is correctly stated, based on the criteria set forth in the Reserve Account Report, in all material respects. An examination involves performing procedures to obtain evidence about the Reserve Account Information. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of the Reserve Account Information, whether due to fraud or error.
In making an assessment of the risks of material misstatement, we considered and obtained an understanding of internal control relevant to the preparation of, and the Reserve Account Information in, the accompanying Reserve Account Report in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of such internal control. Accordingly, no such opinion is expressed. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.
They further conclude that information provided by Circle is true and correct, saying:
In our opinion, the Reserve Account Information in the accompanying Reserve Account Report as of October 31, 2018 at 11:59 PM UTC is correctly stated, based on the criteria set forth in the Reserve Account Report, in all material respects.
Paxos Standard and USDC conduct monthly attestation reports. Gemini Dollar also does this on a regular basis, its most recent report having been published on October 31st. Likely they will conduct them monthly as well.
Such assessments are important because a third-party accounting firm would be the first to throw up red flags if any were to be thrown up. Investors want to be sure that when they hold a stablecoin, it is worth what it’s supposed to be worth rather than nothing as a result of malfeasance at the behest of the issuer. It is a sign of health that the three new stablecoins are setting this standard, and moving forward it should be expected that all stablecoins will adhere to it.