What is USD Coin (USDC), and how does it stay worth a dollar?
USDC is a dollar token issued by Circle. This profile explains what backs it, who can swap it for real dollars and what happened when its peg broke in 2023.
Education only, not investment, tax or legal advice. Crypto-assets are high-risk — risk disclosure.
USDCThe short answer
USD Coin (USDC) is a stablecoin issued by Circle and designed to be worth one US dollar. Circle creates tokens when customers deposit dollars and redeems them one-for-one, holding the reserves mostly in a BlackRock-managed money market fund of short-term US government debt and repos.
Key takeaways
- Circle introduced USDC in September 2018 as a dollar-backed token on Ethereum; it now runs on many blockchains.
- Circle commits to redeem 1 USDC for 1 USD, but only customers with a Circle Mint account can redeem directly.
- Reserves are cash, short-dated U.S. Treasuries and overnight Treasury repos, mostly inside an SEC-registered government money market fund.
- In March 2023, 3.3 billion USD of reserves were caught at the failed Silicon Valley Bank and USDC briefly lost its peg.
- Circle can block addresses and freeze tokens, and USDC is not legal tender or covered by FDIC or SIPC.
What is USDC and who issues it?
USDC is a stablecoin, a crypto token built to keep a steady price. Each USDC is meant to be worth one US dollar. Circle introduced it on 26 September 2018 as a token backed by cash reserves, pegged one-to-one to the dollar and built on Ethereum's open ERC-20 token standard3.
At first USDC was governed through CENTRE, a consortium that Circle co-founded with the exchange Coinbase in 20184. In August 2023 the two firms wound CENTRE down as a separate body; Circle remained the issuer and took its governance work in-house5.
Circle's licences can be checked in official registers. New York's financial regulator lists Circle Internet Financial, LLC with virtual currency and money transmitter licences granted in September 2015, and Circle Internet Trust Company, LLC, doing business as Circle New York Trust, with a limited purpose trust charter granted in July 202610. The register shows licences; it does not say which entity issues each token.
USDC is a private company's token, not government money. Circle's USDC terms say virtual currency is not legal tender, is not backed by the government and is not protected by the FDIC or SIPC7. Our stablecoins explainer compares the main designs.
How does USDC hold its dollar value?
The peg depends on redemption. Circle commits to redeem 1 USDC for 1 USD, subject to its terms, the law and any applicable fees7. That promise, and confidence that Circle can keep it, is what the one-dollar value rests on.
How USDC is created and retired
- 1
Dollars deposited
A Circle Mint customer sends dollars to Circle.
- 2
USDC minted
Circle issues one USDC for each dollar received.
- 3
USDC circulates
Tokens move between wallets, apps and exchanges.
- 4
USDC redeemed
A Circle Mint customer returns USDC and receives 1 USD for each, subject to the terms.
Not every holder has that right. Circle's terms say only users with a Circle Mint account in good standing can redeem directly; everyone else must open such an account first7. Everyone else buys and sells USDC on trading platforms and relies on the market price staying close to one dollar.
Two kinds of USDC holder Source: [7]
| Question | Circle Mint customer | Everyone else |
|---|---|---|
| Can mint USDC with dollars? | Yes | No |
| Can redeem 1 USDC for 1 USD with Circle? | Yes, subject to terms and fees | No, must open an account first |
| How do they exit? | Redeem with Circle | Sell on a platform at the market price |
What backs USDC, and who checks the reserves?
Circle says USDC is backed 100% by cash and cash-like assets: cash, short-dated U.S. Treasury bills and overnight Treasury repurchase agreements (repos, very short loans secured by Treasuries)1.
Where USDC's reserves are held, according to Circle Source: [1]
| Part of the reserve | What it is | Who reports on it |
|---|---|---|
| Circle Reserve Fund (USDXX) | SEC-registered 2a-7 government money market fund holding Treasuries and repos; holds most of the reserve | Managed by BlackRock, which publishes daily third-party reporting |
| Cash | Deposits, mostly at a handful of very large banks | Covered by Circle's monthly assurance reports |
Each month a Big Four accounting firm, currently Deloitte & Touche, provides third-party assurance that the reserves are worth more than the USDC in circulation1. That is a check of reserves against tokens. It is narrower than a full audit of Circle's whole business.
Risk warning
An attestation is not an audit
Reserve reports confirm a balance at particular dates. They do not guarantee what happens between reports or how quickly a bank or fund can pay out under stress, as March 2023 showed.
What happened when USDC lost its peg in 2023?
In March 2023 Silicon Valley Bank failed. Circle had 3.3 billion USD of USDC reserves deposited there, about 8% of the total6. While it was unclear whether that money would be recovered, USDC traded below one dollar.
The gap closed after the U.S. Treasury Secretary and bank regulators announced that all Silicon Valley Bank depositors would be made whole, and Circle said the reserves would be available when banks reopened6. Circle restated that USDC remained redeemable one-for-one6. The episode shows that a fully reserved stablecoin still depends on the banks that hold its cash.
Figure · USDC: key dates
- Sep 2018Launch
- Oct 2018CENTRE founded
- Mar 2023SVB failure, brief de-peg
- Aug 2023CENTRE folded into Circle
- Jul 2025GENIUS Act signed
- Jul 2026NYDFS trust charter
USDC milestones
The rules around dollar stablecoins have since changed. In April 2025 SEC staff said offers of certain payment stablecoins do not involve securities, a view with no legal force8, and in July 2025 the GENIUS Act, which regulates payment stablecoins, became law9. See our GENIUS Act explainer; this page makes no claim about any issuer's status under it.
Which blockchains is USDC on, and what is it used for?
USDC has no blockchain of its own. It is a token issued on many networks, including Ethereum, Solana, Base, Arbitrum, Avalanche and Polygon2. Circle markets it for fast global payments and for markets that run around the clock2. On Ethereum, sending it still requires a little ether for fees.
What are the specific risks of holding USDC?
- Banking and reserve risk. Reserves sit with banks and a money market fund. When one bank failed in 2023, USDC slipped below a dollar until the deposits were secured6.
- Freezes and blocks. Circle can block addresses and freeze USDC it links to illegal activity or terms breaches, and must act on valid government orders7.
- Limited redemption. Only Circle Mint customers redeem directly7; others depend on market prices.
- No insurance. USDC is not covered by the FDIC or SIPC7.
- Platform risk. USDC held on an exchange depends on that exchange as well as on Circle. Read our guide to crypto custody.
Risk warning
A stablecoin is not a savings account
USDC aims for a fixed value, but it can and has traded below one dollar. Nothing on this page is investment advice; read our risk disclosure.
What mistakes do beginners make with USDC?
Common beginner mistakes
Assuming it is insured like a bank deposit
It is not. Circle's terms rule out FDIC and SIPC protection.
Sending on the wrong network
USDC exists on many chains. Make sure the receiver supports the network you send on.
Forgetting the gas token
Moving USDC requires the network's own coin for fees, such as ETH on Ethereum or SOL on Solana.
Confusing look-alike tokens
Anyone can create a token called "USDC". Make sure you are dealing in the token issued by Circle, not a copy with the same name.
Frequently asked questions
Can I redeem USDC for dollars myself?
Only through a Circle Mint account in good standing7. Other holders can sell USDC on a trading platform instead.
Can Circle freeze my USDC?
Yes. Its terms let it block addresses and freeze USDC linked to illegal activity or terms breaches, and to comply with valid legal orders7.
How is USDC different from USDT?
Both are dollar stablecoins run by private companies. They differ in issuer, where reserves are held and how reserves are reported. Our Tether profile sets out USDT's side.
Is USDC a security?
In April 2025 SEC staff said offers of certain payment stablecoins do not involve securities, but stressed the statement has no legal force8. Laws differ between countries.
The bottom line
USDC is a dollar token whose value rests on Circle's reserves, held mostly in a government money market fund, and on Circle's promise to redeem one-for-one. Monthly reserve reports and daily fund reporting add transparency, but the 2023 bank failure showed the peg can still slip. Remember it is not insured and can be frozen.
Sources
- Transparency & Stability — Circle (circle.com) Primary source
- USDC — Circle (circle.com) Primary source
- Introducing USD Coin (USDC), a Fully Reserved Stablecoin — Circle blog, 2018 Primary source
- Circle & Coinbase Join Forces to Found the CENTRE Consortium — Circle blog, 2018 Primary source
- Ushering in the next chapter for USDC — Circle blog, 2023 Primary source
- $3.3 Billion of USDC Reserve Risk Removed, Dollar De-peg Closes — Circle pressroom, 2023 Primary source
- USDC Terms — Circle (circle.com) Primary source
- Statement on Stablecoins — U.S. Securities and Exchange Commission, Division of Corporation Finance, 2025 Primary source
- The President Signed into Law S. 1582 — The White House, 2025 Primary source
- Virtual Currency Business Licensing: regulated entities — New York State Department of Financial Services (NYDFS), 2026 Primary source
How we checked this page: every figure above links to the numbered source it came from. Spotted an error? Tell the desk — see our editorial policy.
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