Sputnik: The USD coin will be the first major cryptocurrency released by a major financial institution, why did you decide to get involved in the crypto realm and what expectations do you have on the coin's future?
Jeremy Allaire: Circle got started five years ago, and we saw that cryptocurrency technology was going to be a new foundational layer of the Internet, and would represent a new set of open infrastructure that we could build all kinds of applications on top of. We could build applications in finance across currencies, capital markets, lending; we could build applications in other areas as well, like identity on the Internet, as examples.
We started five years ago really with the vision that money should be able to move around, the same way that information in content data moves around the Internet – instantly, globally, openly, freely, and that’s really the promise of these public blockchains.
Without getting into all the details, Circle has a number of different products and businesses in this space, and this is one of our latest products, which is creating a way to use US dollars over these blockchain networks, which really essentially allows the US dollar to gain the benefits of public blockchains, which is instant transfer to any internet-connected device in the world in seconds with very high levels of security and auditability.
Sputnik: How is the coin set to provide stability then? How do you plan to reach those goals?
Jeremy Allaire: The way to think about these different types of crypto assets is that they really fall into three different kinds of buckets: you’ve got cryptocurrencies, then you have things more like commodities – I think Bitcoin is really classified more as a commodity, and its price behaves more like a commodity, like gold.
And then you have an emerging category – crypto securities, which are essentially financial contracts that are represented using a cryptographic token or asset, we’re interested in the case of USD Coin, in really having a price-stable fiat backed cryptocurrency; because people who conduct financial transactions, whether it’s a payment for a cup of coffee, or an investment in a financial contract, or a trade deal you are making with a counter party anywhere in the world — you want price stability for those activities and fiat for most modern economies provides that price stability because of central bank backing and the mechanisms that central banks use to maintain price stability.
Marrying those two together makes a great deal of sense. In the case of USD Coin, it is a 100-percent asset backed. So for every dollar of USD Coin there is a dollar sitting in a central bank reserve account to back that, and that’s how we can achieve price stability around this coin.
Sputnik: How can this coin then have this stability, when there is so much instability circumnavigating the global economic markets?
Jeremy Allaire: USD Coin or USDC is one issued fiat-backed stable coin, as we call it, through a new open organization that Circle helped create called CENTER, and CENTER is an independent organization that provides an open source technology, meaning a technology that any financial institution, any fintech company, any crypto company could use to implement other fiat stable coins.
So we have members joining from Asia, we have partners interested from Europe, and what we expect to see is asset-backed fiat stable coins on this open space framework for most of the major currencies in the world.
Ultimately, the digital economy, the global digital economy is going to have a wide variety of fiat-backed stable coins; we ultimately believe that the technology revolution of crypto will make it possible to build kind of composite, basket-based, tokenized currency.
So, you can imagine something like the special drawing right currency that the IMF defined, which is in basket of essentially market cap or trade-weighted, you know, currencies, into a composite currency.
There will be experiments in those kinds of things, it’s possible now to kind of create a token for that, and that can become a denominator, and that allows market participants, whether they are individuals or businesses conducting trade to essentially hedge across a wide range of different global reserve currencies as well. We anticipate a lot of innovation and global currency models coming in the coming decade.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.