USDB vs USDC: what a custodial wallet actually does behind the scenes
USDB — the custodial balance
When you deposit fiat into 1TCH (via Wire, ACH, SEPA, or SPEI), it doesn't sit in a traditional bank account. Instead, it's held as a USDB custodial wallet balance managed by Bridge — a regulated money transmitter.
USDB is a stablecoin-like unit pegged 1:1 to the US dollar. Your balance represents dollars held in custody on your behalf. You never handle private keys; custody is regulated and insured, not self-custodied.
- What it is: A custodial dollar balance, held by Bridge, pegged 1:1 to USD.
- What it isn't: An on-chain token. USDB doesn't exist on a blockchain — it's an internal ledger entry in Bridge's custody system.
- Why it exists: It lets 1TCH accept fiat deposits and convert them to on-chain USDC at payout, without requiring users to manage crypto wallets or private keys.
USDC — the settlement asset
When you send a payment from 1TCH to an on-chain address, your USDB balance is converted and settled as USDC — Circle's regulated, dollar-backed stablecoin — on your chosen blockchain (Solana, Ethereum, Base, or Polygon).
- What it is: An on-chain ERC-20 token, fully backed by US Treasuries and cash reserves, audited monthly.
- What it isn't: A custodial balance. Once USDC lands in your wallet, you hold the private keys (if you use a self-custody wallet like Phantom or MetaMask).
- Why it matters: USDC is the most widely used regulated stablecoin, accepted across DeFi protocols, exchanges, and merchant payment systems worldwide.
How the conversion works
- Deposit — You send fiat (e.g., USD via Wire) to your 1TCH virtual account. Bridge credits your USDB balance.
- Hold — Your USDB sits in regulated custody, earning no yield but fully backed 1:1 by dollar reserves.
- Payout — When you send to an on-chain address, Bridge converts USDB → USDC and delivers it to your destination wallet on the chain you selected.
- Settlement — USDC arrives in your wallet, fully yours, on-chain, transferable anywhere.
Why not just hold USDC directly?
You can — once it's in your wallet, it's yours. But the USDB custody layer solves a real problem: it lets you deposit fiat (which most users have) and receive crypto (which most users want) without needing an exchange account, a crypto wallet, or knowledge of how to buy USDC. The conversion is automatic, instant, and happens at the point of payout.
Security and regulation
Bridge is a regulated money transmitter in the US, holding money transmitter licenses (MTLs) across states. USDB balances are held in segregated accounts, separate from Bridge's operational funds. USDC is issued by Circle, a publicly traded company subject to full reserve disclosures and monthly attestations.
This dual-layer model — regulated custody (USDB) + regulated on-chain settlement (USDC) — is what lets 1TCH offer both the safety of traditional banking and the speed and flexibility of crypto, in one account.