Circle Expands USDC Stablecoin Support to Five New Blockchains

Circle, the company behind the world’s second largest stablecoin, announced on Wednesday that it will soon make USDC available on five additional blockchains.

Early next year, USDC will be compatible with Arbitrum, Cosmos, NEAR, Optimism and Polkadot, the company’s Chief Product Officer Nikhil Chandhok revealed today to a live audience at Circle’s Converge22 conference.

Stablecoins are cryptocurrencies linked to the value of a government-backed fiat currency, most often the US dollar – as is the case with USDC. They are usually fully secured by real-world cash and assets, thus acting as a solid crypto-asset that is supposedly immune to the volatility of the crypto market. For this reason, stablecoins are particularly popular among traditional financial institutions that are wading into crypto.

“Expanding multi-chain support for USDC opens the door for institutions, exchanges, developers and more to innovate and have easier access to a trusted and stable digital dollar,” Circle’s VP of Product Joao Reginatto said in a statement.

USDC will operate on Arbitrum, NEAR, Optimism and Polkadot by the end of the year, the company said today. Compatibility with Cosmos is expected to launch in early 2023.

Today’s announced expansion will soon bring the total number of USDC compatible blockchains to 14. The coin is already operational on Ethereum, Solana, Avalanche, Polygon. TRON, Algorand, Flow, Hedera and Stellar.

Circle management also announced on stage today the upcoming launch of a Cross-Chain Transfer Protocol for USDC, which will streamline the process of transacting the cryptocurrency across blockchains. The protocol will specifically help developers create wallets, apps and financial services tools that allow and encourage the seamless transfer of USDC across networks.

The company admitted in a statement that current mechanisms for transacting USDC across blockchains are “creating fragmented liquidity and [offer] a complicated user experience.”

“The Cross-Chain Transfer Protocol ultimately enables USDC to act as a universal dollar liquidity layer across ecosystems, providing the most capital-efficient way to transport value across the crypto ecosystemReginatto said.

The protocol is expected to be available on Ethereum and Avalanche by the end of the year, with compatibility across other chains to follow in 2023.

USDC’s main competitor – and the largest stablecoin by market capitalization – is Tethers USDT, which currently operates on 13 blockchains and is expected to expand to Polygon in the near future.

Asset-backed stablecoins such as USDC and USDT gained increased relevance and support after Terra’s algorithmic stablecoin, UST, imploded at the beginning of Maywhich leads to annihilation of over 40 billion dollars in value. UST was not backed by any assets, and instead relied on an (ultimately flawed) algorithmic relationship with Terra’s original token, LUNA, to maintain its dollar peg.

USDC and USDT both retained their value and reputation during the market turmoil that followed Terra’s collapse, largely due to the fact that both cryptocurrencies are backed by assets audited and monitored by US financial institutions.

However, that supervision can cut both ways. Last month, when the US Treasury Department blacklisted Ethereum coin mixing tool Tornado Cash and wallet addresses associated with the service, Circle moved to pre-freeze USDC linked to these wallets, in one move rejected by privacy advocates as inappropriate compliance with overreaching government censorship.

Following the event, many organizations, including MakerDAO, the largest decentralized finance protocol by market cap, have started selling from USDCgiven Circle’s apparent policy of compliance with government sanctions.