Circle Internet Financial Europe SAS

Disclaimer

This e-money token ("EMT") white paper ("White Paper") has not been approved by any competent authority in any Member State of the European Union ("EU"). The issuer of the crypto-asset is solely responsible for the content of this White Paper.

This White Paper complies with Title IV of Regulation (EU) 2023/1114 and to the best of the knowledge of the management body, the information presented in the White Paper is fair, clear, and not misleading and the White Paper makes no omission likely to affect its import.

The e-money token USDC ("USDC") issued by Circle Internet Financial Europe SAS ("Circle SAS") is not covered by the investor compensation schemes under Directive 97/9/EC. USDC is not covered by the deposit guarantee schemes under Directive 2014/49/EU.

Executive Summary

This summary should be read as an introduction to the White Paper. The prospective holder should base any decision to purchase USDC on the content of the White Paper as a whole and not on this summary alone.

The offer to the public of USDC does not constitute an offer or solicitation to purchase financial instruments and any such offer or solicitation can be made only by means of a prospectus or other offer documents pursuant to the applicable national law.

This White Paper does not constitute a prospectus as referred to in Regulation (EU) 2017/1129 of the European Parliament and of the Council (36) or any other offer document pursuant to EU or national law.

USDC is an EMT, available on public blockchain networks. USDC provides a faster, safer, and more efficient way to send, spend, and exchange money around the world.

For every USDC issued by Circle SAS and remaining in circulation in the European Economic Area ("EEA"), Circle SAS will hold either one U.S. Dollar ("USD") or an equivalent amount of USD-denominated assets on behalf of holders, in order to facilitate the frictionless movement of the e-money tokens, utilizing blockchain technology. As a fully reserved e-money token, USDC is backed by an equivalent amount of U.S. Dollar-denominated assets held by Circle SAS and redeemable 1:1 for U.S. dollars.

The holders of USDC that are residents of the EEA have a right of redemption at any time and at par value. Conditions and processes for redemption of USDC are detailed in our Redemption Policy available on Circle’s website (the "Website"). 

For holders of USDC located outside of the EEA, please refer to the specific USDC Terms of Circle Internet Financial, LLC, organised under the laws of the state of Delaware, USA, with a registered office at 99 High Street, Suite 1701, Boston, MA 02110 ("Circle LLC").

USDC is only available for issuance through the Circle Mint service and its access is limited to institutions located in supported jurisdictions. For a complete list of currently supported jurisdictions, please consult our Website. USDC is listed across different regulated crypto-asset service providers, and Circle SAS intends to seek its admission to trading on future MiCA-compliant trading  platforms.

1 Information about Circle SAS

Issuer name	Circle Internet Financial Europe SAS
Legal form	French Société par actions simplifiée
Registered address	4 RUE DE MARIVAUX, 75002 PARIS - FRANCE
Registration date	2023-07-10
Registration number	953 990 934 RCS Paris
LEI	969500OYUDADGZKCR583
Contact number	+33 (1) 59000130
Contact email address	EEA-Customer-Support@circle.com
Response time (in days)	7 days
Parent Company	Circle Internet Financial Limited, having its registered office located at 70 Sir Rogerson’s Quay, Dublin 2, D02 R296, Ireland ("Circle Ltd.", and together with Circle SAS, Circle LLC and all of their affiliates, "Circle")
Management	Mrs. Coralie Billmann Président (President) Mr. Michel Vaugiac Directeur Général (General Manager)
Business Activity	Circle SAS is a Digital Asset Services Provider registered with the AMF under number E2024-111, authorized to provide digital assets custody and trading of digital assets against other digital assets since 15 April 2024. Circle SAS is also an Electronic Money Institution registered with the ACPR under number  17788, and provides  e-money token services.
Parent Company Business Activity	Circle Ltd.  is the holding company for the Circle group.
Conflict of interest disclosure	No conflict of interests have been identified as of today in relation to the issuance of USDC.
Issuance of other crypto-assets	Circle SAS also issues EURC, a euro based e-money token.
Activities linked to other crypto-assets issued by Circle SAS	Circle SAS is also issuing EURC. Services provided on EURC are similar to the ones provided on USDC.
Connection between the Issuer and the entity running the DLT	Circle SAS will initially offer USDC on 11 blockchains: Ethereum, Avalanche, Solana, Polygon, Arbitrum, Optimism, Base, Noble, Algorand, Stellar, and Polkadot. Circle SAS will likely add additional blockchain support in the future and will update the relevant sections of the White Paper accordingly. For each of these blockchains, Circle has entered into agreements with the blockchain entity or foundation, where it exists,  responsible for its adoption, by which Circle agreed to design and deploy USDC on blockchain networks, to make it available on the Circle Mint application, and to offer support to Circle’s clients accordingly.  Circle, for regulatory reasons (including transaction monitoring), and as part of its commitment to support the ecosystem, runs a node on each of the supported blockchains.  It is common practice for the relevant blockchain foundation to support Circle's technical development efforts through a one-off financial compensatory payment.
Newly Established	Yes
Financial conditions since registration	Circle SAS was incorporated in July 2023 and has not offered any products or services to date, pending EMI license approval from the ACPR.  Circle SAS has no debt to date.
Exemption from authorisation	No
Asset Token Authorisation	EMI license n°17788 dated 1 July 2024
Authorisation authority	ACPR

2 Information about USDC

Circle’s mission is to raise global economic prosperity through the frictionless exchange of value.

Circle was founded on a belief that blockchains and digital currency will rewire the global economic system, creating a fundamentally more open, inclusive, efficient, and integrated world economy. Circle envisions a global economy where people and businesses everywhere can more freely connect and transact with each other, through a system that has the reach and accessibility of the internet and knows no borders or boundaries. Circle believes such a system can raise prosperity for people and companies everywhere.

2.1. Name

USDC is a digital token pegged to the USD and was first issued by Circle LLC in September 2018. From 1 July 2024, Circle SAS will become a second, or "dual issuer" of USDC. 

2.2. Characteristics

USDC issued by Circle SAS are fully fungible with those issued by Circle LLC. USDC will be fully backed by an equivalent amount of USD-denominated assets held by Circle SAS with regulated financial institutions in segregated accounts separate from Circle SAS’s corporate funds, on behalf of, and for the benefit of, USDC holders (the "Segregated Accounts"). This means that for every USDC issued by Circle SAS and remaining in circulation, Circle SAS will hold on behalf of holders either one USD or an equivalent amount of USD-denominated assets in its Segregated Accounts (the "USDC Reserves"). 

The USDC Reserves are independently reviewed by leading accounting firms, providing monthly confirmation that they match or exceed the USDC in circulation in the EEA. USDC is not designed to create returns for holders, increase in value, or otherwise accrue financial benefit to the USDC holder.

2.3. Partners

Circle has built a network of partners over time to issue and develop USDC use cases for its users. For more information on Circle’s partners or to become one, please refer to the Partners section of Circle’s Website.

3 Information about the offer to the public of USDC and its admission to trading

3.1. Offer to the public

This White Paper primarily concerns the offer to the public of USDC. However, since only eligible institutional clients are allowed to obtain USDC directly from Circle SAS through Circle Mint, this White Paper also applies to the availability of USDC on various crypto-asset trading platforms, accessible to everyone. These platforms admit USDC to trading and/or provide certain crypto-asset services in relation to USDC, such as custody services and sale or purchase of USDC against legal tender or other crypto-assets.

3.2. Supply

The supply of USDC is not limited to any fixed amount within its minting smart contract. There is no limitation in terms of the number of USDC to be offered to the public or admitted to trading.  

As of 20 June 2024, USDC has an outstanding supply of 32.6 billion USDC, all issued by Circle LLC. 

The total number of e-money tokens issued by Circle SAS will depend on EEA-based market demand. The outstanding supply, as well as the corresponding MiCA-compliant USDC Reserves, will reflect the number of e-money tokens issued by Circle SAS minus the number of tokens redeemed via Circle SAS. For more information regarding USDC circulating supply, balances, and periodic issuance and redemption, please refer to Circle Website.

3.3. Trading platforms

USDC is supported by major global regulated digital asset services providers operating in the EEA, such as Coinbase, Kraken, Binance, Bitstamp, Bitpanda, and Bitvavo, among others. 

Circle SAS intends to maintain these listings as long as doing so remains compliant with Applicable Laws, and will continue to seek admission to trading for USDC across future MiCA-compliant trading platforms.

3.4. Jurisdiction

The offer to the public of USDC in the EEA shall be governed by and interpreted in accordance with the laws of France (the "Applicable Laws").

3.5. Competent Court

Any dispute with the offer to the public of USDC in the EEA shall be brought exclusively in the Commercial courts of Paris, France except where prohibited by Applicable Laws.

4 Information on the rights and obligations attached to USDC

4.1. Holders rights and obligations

USDC issued by Circle SAS is an EMT subject to MiCA regulation and Applicable Laws. Under these regulations, EMT means a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency.

Holding USDC tokens does not provide rights to USDC holders other than those rights provided within this White Paper, as well as under MiCA regulation and Applicable Laws. 

USDC holders understand that sending USDC to another address automatically transfers and assigns to the owner of that address, and any subsequent USDC holder, the right to redeem USDC for USD funds so long as the USDC holder is eligible to.

USDC transactions are not reversible. Once USDC holders send USDC to an address, USDC holders accept the risk that they may lose access to, and any claim on, that USDC indefinitely or permanently. For example, (i) an address may have been entered incorrectly and the true owner of the address may never be discovered, (ii) USDC holders may not have (or subsequently lose) the private key associated with such address, (iii) an address may belong to an entity that will not return the USDC, or (iv) an address belongs to an entity that may return the USDC but first requires action on their part, such as verification of USDC holders’ identity. For the avoidance of doubt, Circle SAS is not obligated to track, verify or determine the provenance of USDC balances for USDC holders, including any form of security interests claimed thereon unless otherwise stated in the Applicable Laws.

Holders of USDC have a legal claim against Circle SAS as the EU issuer of USDC. These holders are entitled to request redemption of their USDC from Circle SAS. Such redemption will be made at any time and at par value.

While Circle SAS may hold the USDC Reserves in interest-bearing accounts or other yield-generating instruments, USDC holders acknowledge that they are not entitled to any interest or other returns earned on such funds.  USDC does not itself generate any interest or return for USDC holders and only represents your right to redeem USDC for an equivalent amount of USD as provided in the present White Paper.

As required by its license, Circle SAS will validate and process redemptions for EEA-based holders of USDC that successfully pass prior Anti-Money Laundering ("AML") checks, which include: 

• Collection of relevant Know Your Customer documents;
• Verification of identity and screening versus international sanctions lists;
• Verification of bank details; and
• Circle’s Compliance department validation

More information on the redemption of USDC within the EEA is provided in the Circle SAS Redemption Policy available on Website.

Holders of USDC located outside of the EEA shall refer to the Circle Mint user agreement and/or the USDC Terms of Circle LLC applicable to them, in particular for the redemption of USDC.

The holding of USDC will not result in: (i) the creation or imposition of any lien upon any property, asset, or revenue of Circle SAS or (ii) the creation of any shareholding or ownership interest in Circle SAS, Circle LLC, or any of their respective affiliates.

By holding, using, or accessing USDC, USDC holders further represent and warrant that:

• they are holding and using USDC in compliance with this White Paper and Applicable Laws;
• they are at least 18 years old, are not a Restricted Person (as defined in the Redemption Policy), and are not holding USDC on behalf of a Restricted Person; and
• they will not be using USDC for any illegal activity including, but not limited to, illegal gambling, money laundering, fraud, blackmail, extortion, ransoming data, terrorism financing, other violent activities, or any prohibited market practices. For more details, please consult Circle’s Acceptable Use Policy. 

USDC holders accept that Circle SAS reserves the right to block certain USDC addresses that it determines, in its sole discretion, may be associated with illegal activity or activity that otherwise violates Circle SAS’s Terms of Use and/or this White Paper ("Blocked Addresses"). In the event that a USDC holder sends USDC to a Blocked Address, or receives USDC from a Blocked Address, Circle SAS may freeze such USDC.  In certain circumstances, Circle SAS may deem it necessary to report such suspected illegal activity to relevant law enforcement agencies and holders of USDC may forfeit any rights associated with their USDC, including the ability to redeem USDC for USD. Circle SAS may also be required to freeze USDC and/or surrender associated USD held in segregated accounts in the event it receives a legal order from a valid government authority requiring it to do so.

USDC is also issued and redeemed in accordance with Circle's Stablecoin Access Denial Policy.  Circle SAS reserves the right to block the transfer of USDC to and from an address on chain as permitted under such policy.

USDC holders shall hold and use USDC exclusively for their own account and shall in no case be considered as nominees or agents of Circle SAS, unless otherwise expressly agreed in written by Circle SAS.

USDC holders are duly informed that Circle SAS’s liability (and its affiliates, its respective officers, directors, agents, joint venturers, employees, and suppliers) is limited to what is expressly provided in the Applicable Laws and the present White Paper. In particular but not limited to, USDC holders are duly informed and acknowledge  that Circle SAS shall bear no liability with regard to i) their use of USDC ; (ii) claims or issue concerning the cost of procurement of substitute goods and services resulting from any goods, data, information, or services purchased or obtained or messages received or transactions entered into involving USDC; or (iii) unauthorized access to or alteration of USDC holders transmissions or data incurred by the use of USDC.

In this respect, to the full extent permissible by Applicable Laws, Circle SAS disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. To the full extent permissible by Applicable Laws, Circle SAS shall not be liable for any damages of any kind arising from the use of USDC, including, but not limited to direct, indirect, incidental, punitive, and consequential damages.

4.2. Amendments on rights and obligations

The rights and obligations associated with USDC and applicable to EEA holders are available in the Redemption Policy and Terms of Use available on Circle’s Website.

Circle SAS reserves the right to amend these rights and obligations from time to time, and will inform its customers of such changes through amendments of this White Paper or the  Redemption Policy on Circle’s Website, or through any other channel of communication considered valid, including on Circle’s Website.

As provided by Article 51 of MiCA regulation, any significant new factor, any material mistake or any material inaccuracy that would be capable of affecting the assessment of USDC will be described in a modified version of this White Paper and notified to the competent authorities and published on Circle’s Website, except when these modifications are related to the implementation by Circle SAS of its Recovery Plan or Redemption Plan (please refer to Sections 4.4 and 4.5 below).

4.3. Insolvency

Circle SAS has implemented high standards for safe and sound financial management of its business. In a situation of financial duress or in periods of economic uncertainty, Circle SAS has established contingency plans to prevent any impact on its activities, including the issuance of USDC, or the rights of USDC holders.

Where Circle SAS is not able to fulfill its obligations or in case of insolvency, the USDC Reserves are duly protected in compliance with the Applicable Laws. In particular, the funds received in exchange for issuance of USDC are protected against any recourse by other creditors of Circle SAS, including in the event of enforcement proceedings or insolvency proceedings against Circle SAS.

If a situation of financial duress or insolvency were to occur, Circle SAS will implement its Recovery and/or Redemption Plan to allow USDC holders to exercise their redemption rights on USDC as further specified in Sections 4.4 and 4.5 below.

4.4. Recovery Plan

Circle SAS’s Recovery Plan will be filed with the ACPR within six months of the date of the offer to the public or admission to trading as mentioned in the Article 55 of MiCA. This Section 4.4 may be updated following the Recovery Plan notification.

Depending on the specific circumstance(s) under which the Recovery Plan is triggered, Circle SAS may have to impose one or more specific restrictions on the redemption of USDC.

Holders will be duly informed about any such restrictions on Circle’s Website. Customers will also be informed via their Circle Mint Account or another valid means of communication between Circle SAS and the Customer. For instance, Circle SAS may temporarily impose:

• liquidity fees on redemptions;
• limits on the amount of USDC that can be redeemed on any working day – such limit will be set both at aggregate levels (e.g. as a percentage of the entire amount of tokens issued) and at wallet levels; and/or
• suspension of redemptions, as a last resort.

These restrictions will be implemented during periods of market stress and Circle SAS will work to restore normal operating conditions – subject to regulatory requirements – in collaboration with the ACPR.

4.5. Redemption Plan

In accordance with Article 55 of MiCA, Circle SAS will provide a Redemption Plan to the ACPR within six months of the date of making USDC available in the EEA. The Redemption Plan is an operational plan to support the orderly redemption of USDC in circulation. This section will be updated following the filing of such Redemption Plan.

The Redemption Plan will be triggered upon a decision by the ACPR, if Circle SAS is unable or likely to be unable to fulfill its obligations, including in the case of insolvency, resolution, or the withdrawal of authorisation of Circle SAS as an E-Money Institution. The processes set forth in the Redemption Plan will be established with a view of ensuring the equitable treatment of all holders and the protection of the right of redemption attached to USDC as described above.

If the ACPR triggers the implementation of the Redemption Plan, any individual claim under Section 4.1 above will be suspended. Instead, Circle SAS will commence the orderly redemption for all token holders in an equitable manner, subject to the Redemption Plan and in collaboration with the ACPR.

As part of this process, a notice will be published informing all USDC holders about the process and timelines to submit their redemption claim. Specifically, the notice will describe the main steps of the redemption process, including the exact date and time when the redemption plan has been activated, the minimum information necessary to file a redemption claim, where the claim should be filed, and the time frame within which USDC holders are required to file their claim. The notice will also contain important information regarding redemption conditions and technical support.

Redemption requests submitted via a redemption claim form will be subject to certain eligibility criteria described in the Redemption Policy, and as further specified in the Redemption Plan notice information, including their identity, their token holdings, AML/CFT compliance, their bank account details, and other information required to file their redemption request. 

4.6. Complaints & Disputes

Customer support

If you have a complaint, please first contact Circle SAS at EEA-Customer-Support@circle.com, or visit the Circle Support Portal.

Description of the complaints-handling procedures 

Holders can file a complaint by leaving a message at the contact number or filing it through the customer support email address or Circle Support Portal. Upon receiving a complaint, the Customer Care Team member will log the case and escalate it to a Customer Care Manager.  The Customer Care Manager is responsible for reviewing the details of the complaint. If appropriate, all details and data will be compiled and escalated to the Legal team.  When such an escalation occurs, the Legal Department is responsible for investigating the case and working towards closure. If escalated to the Legal Department, all communications with the customer will be instructed by the Legal Department.

The Customer Care Department will remain actively involved in any customer complaint or service requirement and serves as a first line of support and an advocate for customers prior to any internal escalation.

 

4.7. Protection scheme

Protection of the value of the USDC

As a MiCA compliant regulated e-money token, USDC will be fully backed by an equivalent amount of USD-denominated assets held by Circle SAS with regulated financial institutions in segregated accounts apart from Circle SAS’s corporate funds, on behalf of, and for the benefit of, USDC holders. 

Applicable Law

The rights and obligations of EEA residents arising out the use or ownership of USDC will be governed by the laws of France.

Competent court

Any dispute concerning the rights and obligations of EEA residents arising out the use or ownership of USDC shall be brought exclusively to the Commercial courts of Paris, France, except where provided otherwise by the Applicable Laws.

5 Technology

5.1. Distributed Ledger Technology

Distributed Ledger Technology ("DLT") refers to a digital system for recording transactions in which the transactions and their details are recorded in multiple places at the same time. Unlike traditional databases, distributed ledgers have no central data store or administration functionality. Instead, the ledger is decentralized, and consensus on the transactions is achieved through a process that involves multiple nodes, each maintaining its own copy of the ledger. The benefits of DLT include increased transparency, enhanced security, improved traceability, and greater efficiency of transactions.

One of the most well-known forms of DLT is a blockchain, which is a subtype characterized by its use of a chain of blocks to manage the ledger. Each block contains a list of transactions and is cryptographically linked to the previous block, ensuring that the data once recorded, cannot be altered retroactively without altering all subsequent blocks. Blockchains also introduce features like smart contracts used by Circle, notably to automate and enforce pre-defined transactions and logic through code, thereby reducing the need for intermediaries and further boosting efficiency.

Blockchains offer significant benefits for consumer choice and interoperability as well. Consumers have the advantage of accessing the open-source code of these blockchains, allowing them to review, verify, and select the platform that best suits their needs. This transparency empowers users to make more informed decisions. Additionally, the open nature of blockchains promotes interoperability, meaning that any type of application that follows the same technical standards can integrate with the blockchain without anyone’s permission. This flexibility enables a wide range of applications to work seamlessly together, fostering innovation and making it easier for different services to connect and interact within the blockchain ecosystem.

Circle SAS issues USDC on multiple blockchains in order to leverage these benefits for the movement of USDC.

5.2. Protocols and Technical Standards

Circle SAS will support USDC on 11 blockchains during its launch phase: Ethereum, Avalanche, Solana, Polygon PoS, Arbitrum One, Optimism Mainnet, Base, Noble, Algorand, Stellar, and Polkadot Asset Hub ("USDC Supported Blockchains"). Circle SAS will likely add additional blockchain support in the future and will update the list of USDC Supported Blockchain on its Website. 

Circle SAS does not have any ability or obligation to prevent or mitigate attacks or resolve any other issues that might arise with any USDC Supported Blockchain. Any such attacks or delays on any USDC Supported Blockchain might materially delay or prevent USDC holders from sending or receiving USDC, and Circle SAS shall bear no responsibility for any losses that result from such issues.

In certain circumstances, including, but not limited to, a copy or fork of a USDC Supported Blockchain or the identification of a security issue with a USDC Supported Blockchain, Circle SAS may be forced to suspend all activities relating to USDC (including tokenizing USD for USDC, redeeming USDC for USD, or sending and receiving USDC) for an extended period of time until such downtime is over and USDC Services can be restored (the "Downtime"). This Downtime will likely occur immediately upon a copy or fork of any USDC Supported Blockchain, potentially with little to no warning, and during this period of Downtime USDC holders may not be able to conduct various activities involving USDC.  

USDC holders are informed that Circle SAS reserves the right to migrate USDC to another blockchain or protocol in the future at its reasonable discretion, including for security reasons. USDC holders will be duly informed via the Website in this respect to allow them to migrate their USDC to the updated list of USDC Supported Blockchains. Circle SAS will not be responsible or liable for any damages, losses, costs, fines, penalties or expenses of whatever nature, whether or not reasonably foreseeable by both Circle SAS or any other interested parties or stakeholders, which USDC holders may suffer, sustain or incur, arising out of or relating to their failure to effectuate a migration of their USDC to another blockchain or protocol identified by Circle SAS as USDC Supported Blockchains.

Blockchains rely on consensus mechanisms to ensure their decentralized network of nodes can reach agreement around transaction validity and ordering. Most of the blockchains USDC is issued on (Algorand, Arbitrum, Avalanche, Base, Ethereum, Optimism, Polkadot, Polygon, and Solana), rely on Proof-of-Stake consensus, which requires that validators stake the native token (e.g. ETH) as collateral in order to qualify as a validator. Validators are selected for consensus based on the proportion of tokens they have staked, and in some cases can lose some of the staked token if they have been shown to sign invalid transactions. The Noble and Stellar blockchains use different models for consensus that rely on trusted nodes to validate transactions. Noble uses a straightforward Proof-of-Authority model, and Stellar leverages the Stellar Consensus Protocol.

Circle has developed its technical e-money token specification for deploying USDC on Ethereum-Virtual-Machine ("EVM") compatible blockchains. This specification extends the existing ERC-20 fungible token standard with additional core functionality required for Circle, for example the blocklisting feature that allows Circle to prevent specific blockchain addresses from sending and receiving USDC. 

For non-EVM compatible blockchains, i.e. blockchains such as Solana or Stellar that use a different system to execute smart contracts, Circle has assessed the existing available Token Standards for each blockchain and deployed USDC on the Token Standard that is best suited for Circle’s specifications and required functionality.

 

Blockchain	Token Standard
Algorand	ASA (Algorand Standard Assets)
Arbitrum	ERC-20
Avalanche	ERC-20
Base	ERC-20
Ethereum	ERC-20
Noble	FiatTokenFactory, a Circle developed module on Noble
Optimism	ERC-20
Polkadot Asset Hub	Polkadot Assets
Polygon	ERC-20
Solana	SPL Token
Stellar	Stellar Assets

 

5.3. Technical Requirements

Technical requirements to access USDC 

Circle Mint, Circle SAS’s service that allows its customers to access USDC directly from Circle SAS, is currently only available to institutions located in supported jurisdictions. Circle Mint is subject to Circle SAS’s Terms of Use.

The purchase of USDC on the secondary market, for example, with EU-regulated trading platforms, is available to all users of these third party platforms. Most third party trading and exchange services provided by regulated crypto-asset service providers are open to retail customers as well and subject to their own compliance requirements.

USDC issuance, transfer, and storage

Circle SAS is issuing USDC with the technical assistance of Circle LLC. Issuance can be requested by eligible institutional clients through our Circle Mint service. Circle Mint is a custodial service, meaning that Circle SAS stores and transfers USDC on behalf of its customers. In addition:

• USDC custody on Circle Mint is technically outsourced to Circle LLC for Circle SAS customer accounts.
• Circle SAS customers can choose to withdraw their USDC from their Circle Mint account to third party custodial accounts (e.g., crypto-asset service providers) or self-custody wallets where the private keys necessary to access and transfer the tokens are held and managed by the holder itself. 
• Neither Circle nor any other third party acting on Circle’s behalf is responsible for the execution of transactions on the various public blockchains that are not controlled by Circle.

Audits

Circle LLC, as an issuer of USDC and as technical provider to Circle SAS, is responsible for ensuring that its smart contracts are developed in a safe and secure manner. As such, Circle works with industry leading security auditing firms such as Chain Security, Kudelski, Halborn, and others, to audit every USDC smart contract prior to launch or upgrade.

Any identified issues during these audits are reviewed, validated, assessed, and remediated according to their severity prior to launch or upgrade.  

As a matter of best practice and policy, Circle SAS always open sources every USDC smart contract that it has deployed. This enables independent security researchers to verify the contract for any security vulnerabilities. To enable responsible disclosure, Circle operates a public Vulnerability Disclosure Program and a private Bug Bounty Program via HackerOne that enables vulnerabilities to be disclosed to Circle.

As part of Circle SAS’s blockchain due diligence process when it evaluates deploying USDC on new blockchains, Circle SAS requires independent security audits to be performed on the blockchains themselves.

Audit outcomes and Remediation Policy

As a matter of policy, all audit results are internally reviewed, validated, assessed, and remediated according to the severity of each finding. Any findings that may lead to loss of funds must be remediated. 

6 Risks

6.1 Issuer-Related Risks

As part of the USDC issuance process, Circle SAS is exposed to several risks:

1. Bankruptcy Risks. This is the risk of Circle SAS going bankrupt, which could result from the insolvency of Circle SAS as part of its activities, the failure of a bank, or other systemic financial risks that could impact the operations and financial solvency of Circle SAS.
2. Third-Party Risks. This is the risk Circle SAS faces in its business relationships with one or more third parties. The ability of Circle SAS to properly carry out its activities relies on the functioning of services provided by several third parties, such as banks providing safeguarding and settlement accounts. The inability by these third party service providers to carry out their activity could affect Circle SAS’s ability to properly issue, manage, and redeem USDC. Third parties can elect to support USDC on their platforms without any authorization or approval by Circle SAS or anyone else.  As a result, USDC support on any third-party platform does not imply any endorsement by Circle SAS that such third-party services are valid, legal, stable or otherwise appropriate. Circle SAS is not responsible for any losses or other issues you might encounter using USDC on non-Circle platforms.
3. Market Risks. This is the risk that USDC Reserves may include assets that are not guaranteed to be readily saleable (such as certain short-term financial securities). In that case, if there is an exceptionally high demand for redemption of USDC, Circle SAS may not be able to fulfill all the redemption requests within the timeframe provided by the Redemption Policy.
4. Risk of Loss. This is the risk of loss caused by fraud, theft, misuse, negligence, or improper administration of USDC or the USDC Reserves.
5. Dual-issuer Risk.  This is the risk that Circle LLC may not be able, temporarily or permanently, to rebalance all or part of its reserve to the USDC Reserves in the event that holdings and redemptions of USDC shift significantly towards the EEA, impacting Circle SAS’s ability to cover its liability towards EEA holders. 
6. Anti-Money Laundering/Counter-Terrorism Financing Risks ("AML/CTF"). This is the risk that crypto-asset wallets holding USDC or transactions in USDC may be used for money laundering or terrorist financing purposes, or identified to a person known to have committed such offenses.
7. Personal Data Risks. This is the risk that the personal data of Circle SAS customers may be leaked or stolen due to a security breach.
8. Risks Related to Circle SAS’s Business Activities and Industry. This is the risk that results from Circle SAS operating in a rapidly changing, regulatorily fragmented, and highly competitive industry.
9. Legal and Regulatory Risk. Circle SAS is subject to numerous laws and regulations, and may fail to comply with such laws and regulatory requirements of the jurisdictions that Circle SAS operates in. Further, Circle SAS could be subjected to investigations, enforcement actions, and penalties. Circle SAS could also be subject to private litigation.
10. Internal Control Risk. Any failure to develop or maintain effective internal controls or any difficulties encountered in the implementation of such controls or their improvement could harm Circle SAS’s business, causing Circle SAS to have to report such failures and lead to a loss of trust in the business.
11. Environmental, Social, and Governance Risks. Circle SAS issues USDC on various public blockchains which use different consensus algorithms. Each public blockchain, depending notably on its consensus algorithm, has certain environmental impacts. Please see Section 7 below for sustainability disclosures for USDC on each individual blockchain. USDC is not issued on blockchains using the most energy-intensive proof-of-work consensus mechanism, and the blockchains currently supported by Circle SAS generally use Proof-of-Stake (or a modified version of that mechanism), the environmental impacts of which are very limited compared to Proof-of-Work. In the future, environmental regulations affecting consensus mechanisms may restrict Circle SAS’s ability to issue USDC on individual public blockchains if their sustainability impact is considered too negative. 

6.2 Token-Related Risks

The USDC token also exposes its holder to several risks:

1. Financial Stability Risks. Since USDC is a major stablecoin that is used by and integrated in many significant market infrastructures (e.g. crypto-asset trading platforms), a problem affecting USDC could have indirect consequences on these infrastructures and cause temporary instability.
2. Secondary Market Price Dislocation Risk. This is the risk that the market value of USDC on the secondary market is not stable compared to the USD. This price dislocation could be caused by various factors, such as the under-collateralization risk and the liquidity risk (see below).
3. Risk of Under-Collateralisation. This is the risk that, due to fraud or mismanagement (by either Circle SAS or a third-party provider), the reserve of assets that guarantees the redeemability of USDC becomes lower than the outstanding quantity of USDC. That risk would likely cause a price dislocation of the market value of USDC (see above) and affect the ability of Circle SAS to redeem holders at par or in a timely manner.  
4. Liquidity Risk. This is the risk that the USDC Reserves may include assets that are not readily liquidated (such as certain short-term financial securities). In that case, if there is an exceptionally high demand for redemption of USDC, Circle SAS may not be able to fulfill all the redemption requests within the timeframe provided by the Redemption Policy. Such risk could also cause a secondary market price risk (see above).
5. Scam Risks. This is the risk of loss resulting from a scam or fraud suffered by USDC holders from other malicious actors. These scams include – but are not limited to – phishing on social networks or by email, fake giveaways, identity theft of Circle SAS or its executive members, creation of fake USDC tokens, offering fake USDC airdrops, among others. 
6. Taxation Risks. The taxation regime that applies to USDC purchases and sales by either individual holders or legal entities will depend on each holder’s jurisdiction. Circle SAS cannot guarantee that conversions of fiat currency against USDC, or conversions of other crypto-assets against USDC, will not incur tax consequences. In addition, holders of USDC should be warned that, based on the current provisions of MiCA, USDC could qualify both as a crypto-asset and as electronic money. Which legal classification prevails might vary amongst national competent authorities and will likely impact the tax treatment of USDC transactions within the EEA.
7. Legal and Regulatory Risk. This risk stems from the fact that e-money tokens and crypto-asset services are unregulated in certain jurisdictions outside of the EU. There is also a lack of regulatory harmonization and cohesion globally which could lead to diverging regulatory frameworks globally and/or an evolution of EU e-money token and crypto-asset rules in the future.

6.3 Technology-Related Risks

Purchasing and using USDC may also expose the holder to technological risks.

1. Blockchain Risks. One or several of the blockchain network(s) on which USDC is issued may be subject to technical vulnerabilities and be exposed to attacks that could lead to a general network disruption, such as unexpected pauses in transactions, inability to proceed with transfers of USDC, major losses for network participants, or unexpected liquidity movements.
2. Smart Contract Risks. The smart contracts deployed by Circle SAS to mint or burn USDC on the various blockchains or to ensure the transfer of USDC (notably to other blockchains) may be exposed to technical vulnerabilities that could lead to losses for USDC holders.
3. Settlement Finality or Irrevocability of Blockchain Transactions. Depending on the tools and services providers used to initiate it, USDC transactions may be irreversible. Once you send USDC to a blockchain address, you accept the risk that you may lose access to, and any claim on, that USDC indefinitely or permanently. For example: (i) a blockchain address may have been entered incorrectly and the true owner of the address may never be discovered, (ii) you may not have (or may subsequently lose) the private key associated with such address, (iii) a blockchain address may belong to an entity that will not return the USDC, or (iv) a blockchain address may belong to an entity that may return the USDC, but first requires action on your part, such as verification of your identity.
4. Personal Data Risks. Pursuant to the General Data Protection Regulation ("GDPR"), Circle SAS is required to take all necessary precautions: (i) with regard to the nature of the data collected and the risks presented by the processing of such data, (ii) to preserve the security of USDC holders' personal data and, (iii) in particular, to prevent such data from being distorted, damaged, or accessed by unauthorised third parties.
5. Unanticipated Risks. E-money tokens such as USDC are a relatively new and untested technology. In addition to the risks included in this section, there might be other risks that cannot be foreseen. Additional risks may also materialize as unanticipated variations or combinations of the risks discussed within this section. 

6.4 Mitigation measures

Regarding the different risks identified in Sections 6.1, 6.2 and 6.3, Circle SAS implements appropriate measures to mitigate these risks and protect its customers, as follows:

1. Mitigation measures concerning issuer-related risks

2. Mitigation measures concerning the token-related risks

3. Mitigation measures concerning technology-related risks

7 Sustainability indicators in relation to environment-related adverse impacts

Circle SAS, acting as an issuer of EMTs, is providing information on principal adverse impacts on the climate and other environment-related adverse impacts of the consensus mechanism used to validate transactions in USDC and to maintain the integrity of the distributed ledger of transactions. 

The information covers the period from 01.01.2023 to 31.12.2023 with estimates used for the period from 01.01.2023 to 31.12.2023. 

The validation of transactions in USDC and the maintenance of the integrity of the distributed ledger of transactions has led to a total estimated energy consumption of 12,007.721 kilowatt-hours (kWh) per calendar year.

The validation of one transaction in USDC has led to a total energy consumption of 0.00109222 kWh per validated transaction.

The validation of transactions in USDC and the maintenance of the integrity of the various distributed ledgers of transactions has resulted in 0 tons Greenhouse Gas (GHG) emissions, calculated based on sources owned or controlled by the blockchain network nodes (scope 1), and 4.5684379 tons GHG indirect emissions from energy purchased by the blockchain network nodes (scope 2), during 2023.

Please see chapter 5 for the features of the consensus mechanisms relevant for principal adverse impacts on the climate and other environment-related adverse impacts

Table 1 below shows Climate and other environment-related indicators for USDC aggregated across all 11 blockchains supported by Circle SAS, while Table 1a below exhibits the indicators across all chains USDC is issued on by Circle SAS individually.

Table 1: Climate and other environment-related indicators for USDC aggregated across all 11 blockchains supported by Circle SAS¹

Table 1a: Climate and other environment-related indicators for USDC across all individual chains USDC is issued by Circle SAS. The data is provided by CCRI across all chains and the methodology to calculate metrics is the same as linked in table 1 above. The individual metrics were rounded as in Table 1. The detailed methodology can be found on Circle’s Website.

 

¹ More details on the methodology used to calculate the metrics from the information and data obtained can be found on Circle SAS Website.

² Source of information, review by third parties, use of data providers or external experts: provided by CCRI as external party

³ The qualitative, descriptive answer to the sustainability indicator 10 "Impact of the use of equipment on natural resources" is the same for USDC on every individual blockchain. The quantitative metric outlined in Table 1a refers to the water consumption during the use phase of the network. Please see here the full descriptive response that is valid for all the 11 chains (please refer to Table 1 above for the sources):

"Natural resources may include water usage, fossil fuels, or critical raw materials. Water usage is relevant for data center operations directly for cooling and indirectly through electricity consumption which is not based on wind or solar (Mytton 2021). Consequently, electricity consumed which is not based on wind or solar may also cause water usage during the production and disposal of hardware. Similarly, fossil fuel usage is relevant for the production, use and the disposal of hardware whenevery electricity is used since electricity consumption from fossil fuels still accounts for over 60% of global electricity production (IEA 2023). Critical raw materials are specifically relevant in the production of hardware as electrical and electrical and electronic equipment typically depend on technology metals that are classified as critical (Chancerel et al 2015). Extensive data collection is required to quantify the impact on water usage, fossil fuel usage, and critical raw materials of the devices of DLT network nodes. Thus, the impact on natural resources, such as water, fossil fuels, and critical raw materials of the production, the use and the disposal of the devices of the DLT network nodes is influenced by the amount of energy consumed, by the type of sources used to generate electricity and by the amount of hardware required by the network. For instance, the water consumption during the use phase of the network amounts to {see individual metrics in Table 1a) kiloliters."