Stellar became the official blockchain for the USDC stablecoin, after Circle added the USDC support to the Algorand blockchain in June 2020.
On Thursday, October 15, the Centre Consortium announced Stellar as the official blockchain for its dollar-pegged USDC stablecoin. Co-founded by Circle and Coinbase, USDC is the second-largest stablecoin after Tether (USDT) and will appear on Stellar around Q1 2021.
With this Stellar becomes the third blockchain to officially support the USDC stablecoin. Also, this will be the first major stablecoin hosting for Stellar. Currently, USDC is completely supported by the Ethereum blockchain network with its circulating supply of $2.7 billion. The latest announcement comes after Circle added the USDC stablecoin support to the Algorand blockchain in June 2020. Speaking about the latest developments, Stellar Development Foundation CEO Denelle Dixon said:
“We look forward to bringing such a reputable and engaged USD asset to the Stellar network. We are focused on creating equitable access to the financial system by building a global network that delivers services to users regardless of their geography. The addition of USDC to Stellar will allow us to continue to expand our global reach in pursuit of this mission while opening up new avenues for growth and innovation for the developers and businesses building on the network.”
The Stellar blockchain has become popular as a value settlement layer. Since its inception, Stellar has facilitated over 1 billion transfers and across 4.6 million accounts, adding the support for USDC brings along with the benefits of global liquidity across platforms and countries. Centre said that this makes USDC an optimal asset for cross-border transactions. Besides, all participants on the Stellar blockchain can use USDC for making efficient transactions on Stellar.
Growing Demand for Stablecoin and Regulatory Hurdles
Most of the stablecoins in the market have their value tied to fiat currencies. Thus, unlike other public cryptocurrencies, stablecoins are relatively stable with a fixed value, say 1 USD. Stablecoins have become increasingly popular among crypto investors to facilitate quick trades on exchanges. Also, they serve as a store of value in many cases.
However, stablecoins haven’t quite gone well with the regulators and see it as a direct threat to the national CBDCs. Also, regulators note that without proper regulations, stablecoins can be a potential tool for illicit money transfers. Regulators note that stablecoins can be a source of money-laundering or terror financing. On the other hand, stablecoin-operators say that they are important for global financial inclusion. Circle Chairman and CEO Jeremy Allaire said:
“We value the increased interoperability and wide range of developers that the Stellar network brings to the table, and look forward to seeing how adding a strong and stable USD anchor to Stellar grows its ecosystem and its importance as a platform driving global financial inclusion.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.