As crypto crashes, this Boston company’s ‘stablecoin’ holds steady

Bitcoin, Ether, and the like are computer-generated currencies with values that can fluctuate by thousands of dollars in a day. By contrast, USD Coin is created by simply depositing US dollars with Centre, a financial consortium founded by Circle. Each depositor gets USD Coins worth exactly as much as the dollars deposited. Centre holds the US dollars in the form of cash, or easily traded short-term US Treasury securities, ensuring that there’s actually a dollar behind every USD Coin in circulation.

This wasn’t the original plan for Circle, which was founded in 2013 to help people easily buy and sell bitcoin and other cryptocurrencies. Early on, the company offered a smartphone app where people could store their crypto, and make fast, low-fee international money transfers by sending crypto instead of dollars. But in 2019, Circle gave up on this concept and reinvented itself as a stablecoin company.

The stability of USD Coin prevented Circle from cashing in on the cryptocurrency gold rush of recent years. But it’s also shielded the company from the stunning collapse of recent weeks.

And now demand for USD Coin is surging as investors shift their assets from more volatile cryptocurrencies. Since Jan. 1, the market cap for bitcoin has fallen 56 percent, from $902 billion to $394 billion, according to CoinMarketCap, a financial website that tracks cryptocurrencies. But over the same period, the total value of USD Coin in circulation has climbed 31 percent, from $42 billion to $55 billion.

“It’s on course to be the third-largest digital asset on the planet,” said Disparte, trailing only bitcoin and Ether. For now, USD Coin is actually number four, trailing a different stablecoin called Tether. But Tether’s market cap has declined by 10 percent so far this year, and Disparte thinks USD Coin is…

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