Eco x Zero Hash: Enabling better financial products

Eco recently announced its partnership with Zero Hash. As of October 24, 2022, all current Eco balances were converted from USD held at Prime Trust into USDC held at Zero Hash on a 1:1 basis. Below we provide more information about the migration.

To be able to preemptively accept the terms and conditions, make sure that you've updated to the latest app version.

Why is Eco migrating to Zero Hash?

Eco customers previously held their balances in USDC, but temporarily (for a few months) we shifted to USD as we migrated between USDC partners. We're now just returning to the original way — USDC, giving users the benefits of programmable money. USDC is one of the most secure and regulated stablecoins in existence, and has processed over $5 trillion in transactions since inception.

What does that mean? Zero Hash and USDC will allow Eco to leverage crypto infrastructure in order to provide great features, and launch those features quickly and effectively. Blockchain technology allows products to leverage the built-in programmability of assets like USDC, rather than needing to build products atop old, ill-suited technology. In order to make good on our promise of putting your money back to work for you, an entirely new and better infrastructure is needed. Zero Hash provides that infrastructure.

We’ve decided that Zero Hash is also the right long-term partner for future integrations that will be included in the Eco app. Their commitment to innovation while maintaining regulatory compliance also suits Eco’s needs as we scale the world’s first open rewards currency.

You can learn more about Zero Hash here.

Can I continue to spend as normal with the Eco app and debit card?

Yes! Nothing is changing in terms of any features. Eco users will continue to benefit from market-leading APY rewards, 5% cash back on spending from top merchants, and Eco Points for spending, saving, and making money. As we continue to grow the world’s first open rewards currency, Zero Hash will allow us to quickly implement and extend those benefits in the future.

If a user does not accept Zero Hash’s terms and conditions, however, access to many features will be temporarily suspended. Your money is safe and at any time you can accept the terms and conditions to get full access again, or your funds can be retrieved by contacting support@eco.com at that point.

What is USDC?

USD Coin (USDC), commonly referred to as a type of stablecoin, is a type of cryptocurrency designed to maintain price equivalence with the U.S. Dollar by holding $1 in reserve for each USDC in circulation. Launched in 2018 by regulated global financial technology firm Circle, there are currently 50+ billion USDC in circulation. USDC has processed over $5 trillion in transactions since inception.

USDC reserves are held in the custody and management of leading U.S. financial institutions, including BlackRock and BNY Mellon. Each month, Grant Thornton LLP, one of America's largest audit, tax and advisory firms, provides third-party assurance as to the size of the USDC reserve.

Circle is regulated as a licensed money transmitter under U.S. state law just like PayPal, Stripe, and Apple Pay. Circle’s financial statements are audited annually and subject to review by the SEC.

Circle aims for USDC to be the most transparent and trusted dollar digital currency. Here’s how they maintain stability:

USDC is fully backed

• USDC has always been backed by the equivalent value of U.S. dollar denominated assets; USDC reserves are kept in the management and custody of leading U.S. financial institutions, including BlackRock and Bank of New York Mellon
• The USDC reserve is held entirely in cash and short-dated U.S. government obligations, consisting of U.S. Treasuries with maturities of 3 months or less
• The USDC reserve currently consists of $10.2 billion cash, $38.6 billion U.S. Treasuries, for a total of $48.8 billion, and there are $47 billion USDC in circulation.
• Since launch September 2018, Circle have published monthly attestations from a leading global accounting firm, that the USDC reserve is worth at least as much as the number of USDC in circulation, providing reputable third-party assurance of this fact to the USDC ecosystem
• Circle, the issuer of USDC, is audited annually, including the USDC reserve; the last two audits, for 2020 and 2021, have been published as part of Circle’s SEC filings as it prepares to become a listed public company on the New York Stock Exchange
• USDC issuance is regulated pursuant to U.S. state money transmission supervision and is subject to ongoing examination of Circle and its operation

USDC is always redeemable 1:1 for U.S. dollars

• A Circle customer can always mint or redeem USDC in 1:1 exchange for U.S. Dollars through their Circle Account; customers are able to mint and redeem nearly instantly subject to settlement of funds
• Individual retail users can exchange USDC for U.S. Dollars globally through leading digital asset exchanges such as Binance, Coinbase and FTX
• Circle provides weekly reporting on minting and redemption activity.
• There are thousands of projects and exchanges supporting USDC in over 190 countries, facilitating use and exchange of USDC for market participants
• The 24-hour trading volume of USDC as of October 6, 2022 was $4 billion

You can learn more about USDC here.

What happens to my money when I deposit it into Eco?

Here’s how USDC works for you in the Eco app:

• When you deposit US Dollars into the Eco app, we leverage Zero Hash’s platform to exchange those US Dollars for USDC on a 1:1 basis.
• Once your US Dollar deposit settles, that equivalent amount of USDC is deposited into an account in your name at Zero Hash and shown in your Eco app balance.
• When you withdraw or spend money from your Eco account, we leverage Zero Hash’s platform to exchange your USDC back into US Dollars on a 1:1 basis for withdrawal to your bank account or payment to a third party.

What is Zero Hash?

Zero Hash is a leading infrastructure platform that allows companies to integrate digital assets natively into their own system quickly and easily. Zero Hash enables developers and businesses to focus on building experiences and products.

You can learn more about Zero Hash here.

If something happens to Eco, can users still retrieve their funds from Zero Hash?

Absolutely! If Eco ceased to exist, you would be able to retrieve your funds directly from Zero Hash. Eco users accept terms of service that make them a direct customer of Zero Hash, so your funds would remain in custody with Zero Hash and available for retrieval. Zero Hash’s contact information is available in the Eco app.

How do I know my money is safe at Eco?

If Zero Hash ever goes bankrupt, a portion of their cash and investments (equal to the deposits) is specially carved out for anyone who buys the deposit liabilities (i.e., the money you deposited into Zero Hash through Eco). While you’re not guaranteed to automatically be paid back your deposits, as a depositor you receive priority for repayment of your deposits by whoever assumes Zero Hash's liabilities via bankruptcy proceedings.

Eco uses Zero Hash to hold all user balances–as our “custodian.” At Zero Hash, deposits are legally treated as actual deposits—liabilities owed to depositors—and not as cash that the company can do anything with.  Those deposits are therefore held by Zero Hash for the benefit of Eco members and are offset on Zero Hash’s balance sheet 1-for-1 as a liability in line with GAAP accounting standards.

Further, certain state money transmitter laws and New York's Bitlicense limit what Zero Hash can do with deposits. For example, Zero Hash is required to maintain enough cash (or other prime assets such as US Treasuries) to match its deposit liabilities. State money transmitter laws require that Zero Hash report audited balance sheets to regulators to confirm that Zero Hash is compliant with these laws.

Read more about Zero Hash.

What are the advantages of using USDC & Zero Hash?

As we’ve written about before, money moves today in much the same fashion as during the 19th century. But blockchain technology is a major upgrade in sending, receiving, and storing money; it’s also more secure than the current financial infrastructure. To that end, Zero Hash’s powerful suite of tools could help Eco in the future by providing options to quickly, safely, and effectively launch features including:

• P2P transfers between users
• Deposit and withdraw from other crypto wallets
• Detailed tax reporting
• Shared accounts
• Buying and selling of crypto assets in a regulated environment
• Automatic portfolio purchases
• And more!