Circle Is Going Public, This May Bring KYC To USDC

It's happening. The merging of crypto and traditional finance is happening in real time.

First USDT began working with law enforcement, now Circle is going public. What more do we need to understand where the industry is headed?

How much time before all exchanges will be obliged to KYC users and pass over this data if they interact with stablecoins as USDC?

I just recall watching some crazy video on USDC right here on Hive some time back, I've honestly forgotten what the message was but I feel it had something to do with “Circles places to take over crypto with USDC”.

NO, this is not an attempt at any conspiracy theory, so let's leave that story where it's at, and focus on what's happening right now.

I feel we should have understood from the very moment Coinbase went public that crypto was going to soon be married to the traditional finance system.

But we overlooked it of course and hyped up mass adoption forgetting what comes with that. Well, here comes mass adoption and it's coming with all its baggage like a 29 year old female cum depository.

Language! I know, sorry.

Circle Going Public

Circle Internet Financial (Circle) today announced that it confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the "SEC"), relating to the proposed initial public offering of its equity securities. The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to take place after the SEC completes its review process, subject to market and other conditions.

^{business wire}

Reportedly, this isn't the first time Circle has made a move to go public but there's a high chance it's for real this time.

So far, that's all the information there is to this movement, no details on the number of shares or the price has been released.

So why do I think this is where KYC comes in?

It's pretty simple, a registered public company has to go by the rules of that sector, so with Circle going public, USDC holders should expect KYC along the line because there's absolutely no way the regulators will not want that data to be associated with all addresses moving the public business's product.

It's basically USD they are moving, so.

And we know how crypto is, everyone at some point will have to touch a stablecoin, so if USDC is that stablecoin, at this point, all user transactions on-chain will be actively tracked and linked back to the KYC’d address.

Coinbase, Blackrock, And Circle

These three companies have quite the relationship that is not widely known. First off, if we are to start with USDC, Coinbase and Circle founded USDC. This is new knowledge to me and probably some others out there. I've never known Coinbase had arms in USDC as I've never cared about it but apparently, it does.

Circle has reportedly been the sole manager of USDC, despite the Centre Consortium governance system of the stablecoin which consisted of Coinbase and Circle.

This consortium was dissolved in August, 2023, Coinbase instead took a stake in the company, Circle, and is speculated to earn more from the stablecoin’s reserves interest.

Circle and Coinbase, the founding companies behind Centre Consortium, a jointly managed self-governance consortium for USDC, have agreed that with growing regulatory clarity for stablecoins in the U.S. and around the world, the requirement of a separate governance body like Centre, is no longer needed.

Centre will no longer exist as a stand-alone entity and Circle will remain as the issuer of USDC, bringing any Centre governance and operations responsibilities in-house. The new structure will streamline the operations and governance, and enhance the direct accountability of Circle as the issuer, including holding all the smart contract keys, complying with regulations on governance of reserves and enabling USDC on new blockchains.

As part of this next chapter, Coinbase and Circle have reached a new agreement. Reflecting Coinbase’s belief in the fundamental importance of stablecoins to the broader crypto economy, Coinbase is taking an equity stake in Circle. This means that Coinbase and Circle will now have even greater strategic and economic alignment on the future of the financial system. Coinbase is committed to the long term success of the stablecoin ecosystem and USDC, specifically.

^{source: circle}

Where does Blackrock come in, in all of this?

First off, Coinbase is the primary custodian for Blackrock’s Bitcoin ETF but it should be obvious that Blackrock isn't here for bitcoin, but crypto.

Having already understood the relationship between Coinbase and Circle, the former is practically the company pulling the strings from the high table while the latter works the farm.

From the start, we’ve managed the USDC reserve to minimize risk — liquidity, counterparty, operational, reputational and more — so that USDC holders can be confident their money is sound and redeemable 1:1 for U.S. dollars at any time. This has guided our approach to regulation, liquidity and transparency and shaped our strategy of partnering with leading financial institutions.

Through our partnership with BlackRock, we have begun investing in the Circle Reserve Fund to manage a portion of the USDC reserves. We expect the reserve composition will continue to be approximately 20% cash and 80% short duration U.S. Treasuries.

The Circle Reserve Fund is a registered Rule 2a-7 government money market fund managed by BlackRock Advisors, LLC and its portfolio will consist of cash and short-dated U.S. Treasuries.

^{source: Circle}

Well, that explains why Blackrock choosing Coinbase was easy, the relationship goes far back to Circle having a relationship with Blackrock via USDC.

And guess what? there are already speculations that USDC stablecoin will become ‘backdoor CBDC’ with BlackRock help.

Make of this report by ledgerinsights.com what you may.

Posted Using InLeo Alpha