Shares of Circle, which is the issuer of the second largest USDC stablecoin, collapsed by more than 20% at auction on March 24. Its competitor, Tether, which issues the leading USDT stablecoin by capitalization, announced that it had attracted an audit firm from the big Four to conduct the first-ever audit of its reserves.
For Circle, this collapse was the worst in all trading time, CNBC calculated. The company went public in June.
The securities of Coinbase, the main USDC distribution platform, have also fallen in price. They lost over 11% of their value.
Tether is not traded on the stock exchange.
What kind of audit
USDT is the most popular stablecoin on the market with a capitalization of $184 billion, according to CryptoQuant data. However, he has been at the center of controversy for years, as Tether promised transparency through quarterly “attestations,” but never conducted a full-fledged formal audit, CNBC explains. This has caused many investors and regulators to fear that USDT reserves are not transparent enough or do not meet the standards.
Stablecoins are cryptocurrencies that are linked in price to an underlying asset, most often the US dollar, and are usually backed by dollar deposits, short—term treasury bonds, and similar monetary equivalents. The checks just help to make sure of this.
The USDC, with a capitalization of $78.6 billion, is considered more “institutional,” CNBC notes. This token undergoes an annual full audit by Deloitte and publishes monthly confirmations.
“The involvement of a big four firm underscores our commitment to giving [investors] confidence that USDT is fully secured, highly liquid, and managed to world-class risk management standards,” Tether said in a statement.