USDC - USDP Stablecoins MAJOR Risk

[Gunnar Larson]

https://www.banking.senate.gov/newsroom/majority/brown-presses-stablecoin-companies-on-risks

USDC (Circle.com) and USDP (Facebook/Meta/Novi famous...) have
obvious mutual conflicts at the Board of Director level.  This is what
seemingly was left out (perhaps, a good technique) of Sen. Brown's letter
to Circle (below).

Senator Brown also sent letters to Coinbase
<https://www.banking.senate.gov/download/letter-to-coinbase>, Gemini
<https://www.banking.senate.gov/download/letter-to-gemini>, Paxos
<https://www.banking.senate.gov/download/letter-to-paxos>, TrustToken
<https://www.banking.senate.gov/download/letter-to-trusttoken>, Binance.US
<https://www.banking.senate.gov/download/letter-to-binanceus>, Centre
<https://www.banking.senate.gov/download/letter-to-centre>, and Tether
<https://www.banking.senate.gov/download/letter-to-tether>.

Dear Mr. Allaire:

I write to request information regarding the USDC stablecoin. As documented
in the recent report (Report) by the President’s Working Group on Financial
Markets (the PWG), stablecoins present investor protection risks and raise
several market integrity concerns. Consumers’ increased use of stablecoins,
and their importance in effecting transactions in digital assets,
underscores the need for greater understanding of the basic operation, and
limitations, of USDC.

As the PWG noted, the market capitalization of stablecoins issued by the
largest stablecoin issuers exceeded $127 billion as of October 2021,
reflecting an almost 500 percent increase over the prior year. The complex
terms and conditions applicable to digital assets and stablecoins, as well
as the need for reliable and resilient underlying networks, can make it
difficult for investors and consumers to fully understand the details of
how those assets function and their potential risks. I have significant
concerns with the non-standardized terms applicable to redemption of
particular stablecoins, how those terms differ from traditional assets, and
how those terms may not be consistent across digital asset trading
platforms.

Even though stablecoins are typically “minted” in exchange for U.S.
dollars, or other conventional currency, the purchase of stablecoins
through a trading platform may not provide customers with the same rights
and entitlements as a direct purchase from an issuer. In addition,
customers may have different rights based on the amount of stablecoins
owned or transacted. Furthermore, because the term stablecoin is used
broadly, users may not appreciate the complexity and distinct features and
terms of each stablecoin.

Accordingly, given the importance of the specifics related to the use of
USDC to investors and consumers, please respond to the questions below in
clear, straightforward terms. I understand that any response would not
affect or change the binding terms or conditions applicable to any
particular customer or circumstance, but your ability to provide
information that can clarify the basic operational features of USDC is
critical to improve the understanding of digital assets.

   1. Please describe the basic purchase, exchange, or minting process[es]
   by which customers can acquire USDC for U.S. dollars. In your answer,
   explain any relevant limitations or qualifications to engaging in and
   completing that process.
   2. Please detail the process to redeem USDC and receive U.S. dollars.
   Here, also, identify any requirements or limits, including any minimum
   redemption size, waiting period, or qualifications.
   3. Since USDC’s inception, how many USDC tokens have been issued, and
   how many have been redeemed? Over the last 12 months, what is the greatest
   percentage of the USDC in circulation at the beginning of a calendar week
   to be redeemed in the subsequent seven days?
   4. Briefly characterize the market or operational conditions that would
   prevent the purchase, or redemption, of USDC for U.S. dollars, or another
   digital asset. For purposes of answering this question, do not list or
   describe legal or regulatory limitations currently described in a user
   agreement or terms of service. For each condition identified, please
   provide at least one example that occurred in the past 12 months and its
   duration.
   5. Please identify any trading platforms that have enhanced
   capabilities, privileges, or special arrangements with respect to USDC,
   identifying those features and their basis (e.g., contractual or common
   control).
   6. Please summarize any internal reviews or studies your company has
   conducted about how specific levels of redemptions would affect USDC,
   including its convertibility into U.S. dollars, or would affect the
   financial position of your company.

Please respond to the above by December 3. I appreciate your attention to
this matter, and thank you for your timely cooperation.

Sincerely,

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