About this Statement
Bitbuy Technologies Inc. (“Bitbuy” or “we”) believes that our users should understand the crypto assets that they are able to trade using our crypto trading platform (the “Platform”). One of the crypto assets we offer through the Platform is USD Coin (“USDC”). We created this summary to help you understand the basics of USDC as well as some of the risks involved in acquiring it. While we tried to describe the key features of USDC here, this summary isn’t meant to tell you everything you’d want to know before acquiring it. You should also do your own research on USDC to make sure you are comfortable acquiring it.
Description of USDC
USDC was launched in October 2018 by the CENTRE consortium, a partnership between Circle, a financial technology company, and Coinbase, a U.S. based crypto trading platform. USDC is a U.S. dollar-backed stablecoin. USDC is natively supported on multiple blockchains, including the Ethereum network and the Solana network.
A stablecoin is a cryptocurrency that is pegged to an underlying asset, such as a national currency or gold. Stablecoins generally use an existing blockchain (like the Ethereum network) to tokenize another asset that is typically less volatile. In holding a USD-based stablecoin like USDC, the holder gains exposure to the underlying asset insofar as each token is theoretically backed by USD$1.00 of fiat currency held under custody. Apart from providing exposure to the asset underlying the stablecoin, the utility value of a stablecoin is that it allows for participants in the crypto asset markets to transfer their holdings in and out of unpegged coins and tokens into an asset that reflects the value of a fiat currency without necessitating a full conversion back to fiat currency. Avoiding full conversions back to fiat currency is desirable because crypto asset-to-stablecoin transactions can generally be achieved more quickly and with lower fees than crypto asset-to-fiat transactions.
At a high level, the USDC system works by allowing users who onboard through a USDC issuer (i.e., an entity authorized by Centre to issue USDC) to transfer funds into the system. The issuer then executes a series of commands with the Centre network to verify, mint, and validate USDC tokens, and the user can transfer those tokens elsewhere as they see fit (subject to the token’s compliance controls). Redemption follows the reverse sequence: a user requests a redemption from an issuer, and upon successful verification and validation, the appropriate USDC tokens are irrevocably deleted from circulation, and funds from underlying reserves are transferred back to the customer’s external bank.
USDC publishes a monthly attestation of the U.S. dollar denominated reserves that back the USDC tokens in circulation. These attestation reports, which are prepared by Grant Thornton LLP, are available at http://centre.io/usdc-transparency.
Like other crypto assets, there are some general risks associated with acquiring USDC. We describe many of these general risks in the risk statement we publish on our website, including risks relating to: (i) volatility; (ii) access, loss or theft, (iii) control of processing power; (iv) settlement of transactions on crypto asset networks; (v) momentum pricing; (vi) private keys; (vii) internet disruptions; (viii) faulty code; (ix) network development and support; (x) regulatory risk; (xi) network forks; (xii) air drops; (xiii) voting rights; (xiv) cybersecurity incidents and other systems and technology problems; and (xv) unforeseeable risks. We also point out some risks that are specific to USDC below. While we tried to describe the key risks associated with USDC here and in our risk statement, these aren’t all of the risks associated with trading in USDC. You should also do your own research on USDC to make sure you are comfortable acquiring it.
Loss of Value on Failure to Perform
A failure of USDC to perform according to expectations (i.e., by being issuable/redeemable in exchange for U.S. dollars) would harm its users and could pose systemic risk. The mere prospect of USDC not performing as expected could result in a “run”– i.e., a self-reinforcing cycle of redemptions and fire sales of reserve assets.
Payment System Risks
USDC faces many of the same basic risks as traditional payment systems, including credit risk, liquidity risk, operational risk, risks arising from improper or ineffective system governance, and settlement risk.
How Bitbuy Decides to List Crypto Assets
Bitbuy reviews crypto assets before making them available for trading on the Platform. In making our decision to list a new crypto asset, we consider publicly available information about the crypto asset, including (among other things) its creation, design, governance, usage, supply, demand, maturity, utility, liquidity, material technical risks and legal and regulatory risks.
To date, we have only made crypto assets available for trading on the Platform which have significant supply, demand and liquidity. In our experience, crypto assets with these qualities tend to also satisfy the other criteria we evaluate as part of our review. That being said, our review process is fulsome and flexible, and we don’t prioritize any one factor over another. You should review the risk statement published on our website for more information about our procedures for determining whether to make a crypto asset available for trading on the Platform.
Bitbuy is offering crypto contracts to purchase and sell USDC in reliance on a prospectus exemption contained in the exemptive relief decision Re Bitbuy Technologies Inc. dated November 30, 2021. The statutory rights of action for damages and the right of rescission in section 130.1 of the Securities Act (Ontario) and similar legislation in the other provinces and territories of Canada would not apply in respect of a misrepresentation in this statement.
No Canadian securities regulatory authority has expressed an opinion about USDC, including an opinion that UDSC is not itself a security and/or derivative.