USD Coin Savings Accounts – How to Make Money With USDC
What is USDC Stablecoin?
USDC is now considered by crypto experts to be the safer choice for investment and trading purposes over the older stablecoin Tether (USDT), because, other than Tether, USDC is issued by regulated companies.
Coinbase and Circle launched USDC in September 2018. The stablecoin is managed by the Centre consortium. As its name suggests, USDC is pegged to the US dollar, hence one US dollar is worth one USDC. The stablecoin runs on the Stellar, Ethereum and Algorand blockchains.
Every time a new USDC token is issued, the corresponding amount of US dollars is kept in designated bank accounts. This ensures stability of the coin and also that the USDC in circulation is equivalent to the fiat currency it’s pegged to.
USD Coin Savings Accounts
Crypto fintechs can offer returns on savings that traditional banks are incapable of. Traditional financial institutions and markets are characterized by instability today. They are struggling with low returns and simply can’t offer good interest on deposits, if any. The comparison table below lists the yield on USDC deposits offered by a few recommended platforms.
|Exchanges||USDC approx. APYs||Terms|
USDC Market Cap
On April 1, 2021, USDC’s live market cap was $10.6 billion. The number of coins in circulation was 10.6 billion respectively. No data on maximum possible supply is available, but experts assert there is no limit to it.
As the stablecoin follows the ERC20 standard, it’s compatible with any app that accepts tokens based on it.
You can use USDC to buy any digital ecosystem item. Fintechs and developers use the programmable dollar. Every transaction is confirmed on Ethereum’s blockchain.
Centre, the organization governing USDC, sets financial, policy, and technical standards for the coin. It has the backing of completely reserved assets. A number of regulated institutions govern its use and operations with the currency, with their being some overlap between these.
They include FinCEN (the U.S. Financial Crimes Enforcement Network), which is part of the US Treasury Department, virtual currency and state transmission regulators, SEC (the Securities and Exchange Commission), OCC (the Office of the Comptroller), and CFTC (Commodity Futures Trading Commission).
Due to concurrent jurisdiction, licensing and/or regulation by one or more of these bodies doesn’t preclude the need to fulfill other regulators’ requirements.
USDC Security and Insurance
Coinbase clearly states on their website that USDC is not legal tender and that USDC holdings are neither insured by the FDIC nor by SIPC. Nonetheless, the way USDC is conceived provides a certain security, even if it is not backed by authorities. The companies behind it have a huge vested interest in ensuring that their stablecoin is secure and trustworthy, otherwise the reputable companies would damage their own reputation and thus their business.
Therefore the accounting firm Grant Thornton LLP attests to USDC reserves in US dollars on a monthly basis. This is one of the top firms of its kind in the world. The reports are published on Circle’s site. The dollars deposited in Centre’s protected accounts make it possible to create an equivalent stablecoin amount within the smart contract and transmit it on the blockchain, which stores the buyer’s USDC.
How Long do USDC Transactions Take?
Typically, purchases of USDC become available to exchanges like Coinbase instantly. Transactions on ETH blockchain must undergo a total of 15 confirmations. This takes under five minutes depending on network traffic at that particular time and the sender’s transaction fee. To reduce the risk of copy-paste errors, using the QR code to get the USDC address is recommended. Alternatively, you can type it in manually.
Uses of USDC
USDC has experienced market capitalization of $1.86 billion since January of last year, corresponding to growth of 250%.
- Personal Money transfers. Private instant global money transfers to family, friends etc. are possible as well.
- Transfers from and to any USDC-supporting Wallet. The stablecoin can be transferred from a non-custodial to a custodial wallet and vice versa.
- Running a company on USDC. Stablecoin-based business banking is more efficient and more scalable than traditional banking. Companies can pay contractors in USDC. This happens much faster than payments in traditional currency.
Who Accepts USDC?
USDC boasts the biggest and best-developed stablecoin ecosystem due to its being a public smart contract and an open standard. Its standard is supported by hundreds of services, products, and companies, including payment and loan services, exchanges, digital wallets, savings, and DeFi protocols.
It can be used as a substitute for the US dollar in trading. This is also possible on platforms that don’t require ID verification. Below, we talk about some exchanges, where this can be done.
Trade USDC on Binance
Binance lets its users trade the following pairs: ETH/USDC, XRP/USDC, BNB/USDC, BTC/USDC, EOS/USDC and XLM/USDC. They are adding USDC/USDT.
Trade USDC on Bitfinex
Bitfinex launched the pairs USDC/USDT (Tether), PAX/USDT (Paxos Standard to Tether), and Tether to TrueUSD (USDT/ TUSD). In some jurisdictions, you can’t trade these pairs.
Trade USDC on Coinbase Pro
Coinbase Pro customers can convert US dollars to USDC without any fee. They can also receive and send USDC from and to their accounts on the platform. Once liquidity is established, which takes at least 12 hours, you can start trading on the ETH/USDC and BTC/USDC order books, among others. The full list of crypto to crypto trading pairs and permitted locations is available here.
Trade USDC on Kraken
Kraken supports the following USD Coin trading pairs: XBT/USDC, ETH/USDC, USDC/USDT, USDC/EUR, and USDC/USD. To make a deposit on the exchange, search for USDC and click on Deposit or go to Funding and select “Show all assets”. You can send USD Coin after generating an address to deposit it to. Before the deposit goes through, 30 confirmations will be required. This takes around six minutes.
The minimum you can deposit or withdrawal is 1 USDC. The fee to set up a deposit address and to make a deposit/withdrawal is 0.5 USDC, coming to a total of 1 USDC if you’re doing both. Kraken also has a trading minimum of 5 USDC for USDC/USDT, USDC/EUR, and USDC/USD. There is no trading maximum.
Trade USDC on Bittrex
Bittrex offers trading in ETH-USDC, BTC-USDC, and USDT-USDC.
Trade USDC on Poloniex
On Poloniex, you can trade USD Coin for Bitcoin, Tether, TRON, and Ethereum.
Trade USDC on eToro
EToro has long offered stablecoins such as USDC for trading. Most recently, it added stablecoins pegged to the Turkish lira (TRYX), Hong Kong dollar (HKDX), the Polish zloty (PLNX), the Singapore dollar (SGDX), and the South African Rand (ZARX). This exchange is actively working to bridge the gap between traditional markets and crypto assets.
How to Convert USDC to Bitcoin
On supported exchanges, select USDC in the left menu and BTC in the right one to see the exchange rate. If the rate is good, enter your Bitcoin wallet address and click on Convert. This will generate an order. The final step is the actual transfer. You’ll get your Bitcoin in your wallet.
How to Cash out USDC
You can cash out USDC and get funds converted in USD, EUR, CHF, GBP, and tens of other traditional currencies on Mt. Pelerin, Coinbase, or an ETH or BTC altcoin exchange. You can also use a provider like Coinsquare to cash out to CAD, EUR, or another fiat currency. If you want to sell USD Coin, you register on an altcoin exchange and load USDC into a BTC ATM or fund your account with USDC. The quickest way to cash out is this because it’s easiest to sell USDC for ETH or BTC by registering on an altcoin exchange. Experts recommend Bitcoin and Ethereum in particular because of their high liquidity.
You can withdraw USDC on 38 exchanges, including Coinone (free), Bitmax (1 USDC), DSX (1.33 USDC), Bit-Z (2 USDC), etc. The full list is available here.
Where to buy USDC With US Dollars
You can purchase USDC with USD on Phemex, Coinbase, Zipmex, Bitpanda, Bitdegree, Binance, Bitstamp, and more. On Coinbase, there’s no fee on transfers via USD wallet or a US bank account when converting from USD to USDC.
Other options to purchase USDC include Circle (only within business partner subscriptions), Cex.io, Bitfinex, Luno.com, and Mt. Pelerin. On the last exchange, there is a 3% exchange margin. FTX.com has plans to introduce wire transfers in USDC.
Purchase USDC with Credit Card
This is possible on the majority of the above exchanges. Buying USDC with a debit or credit card will incur the standard transaction fee.
Final Considerations & Bottom Line
Circle always tokenizes the US dollar – USDC exchange rate at $1 per 1 USDC. When exchanging USDC for US dollars, the rate is 1:1 again, minus any applicable fees. Circle maintains an amount corresponding to $1 for each USDC they issue and circulate in segregated accounts with partner banks. This is done to ensure safety and stability.
So far, so good. However, whether this is 100% guaranteed all the time is another matter. Circle takes these actions to maintain USDC value stability, but there’s no guarantee that the value of one USD Coin will equal one dollar in every event. The truth of the matter is that Circle can’t control everything. The value of USDC can fluctuate below or above one dollar, especially on crypto exchanges and other third-party platforms not affiliated with Circle.
USD Coin runs on blockchains and is based on open source software, which means third parties can choose to offer the stablecoin on their platforms without Circle or anyone else’s approval or even authorization. Circle can’t guarantee the appropriateness, stability, legitimacy, or validity of any third party platform. Users trade on these platforms at their own risk. Of course, the issuer won’t take responsibility for any losses or other problems people might have trading the stablecoin on such platforms.
Another downside is that you can’t reverse a USDC transaction. Users must accept the possibility of losing claims and access to any USDC sent to an address, permanently or indefinitely.