I understand its an ERC20 token. Do you understand how Coinbase and Circle will remain within regulatory compliance (AML/KYC) regarding USDC and the obvious potential for money laundering?
Money laundering is a problem they must have faced earlier when allowing BTC trades, so presumably they'll operate under the same AML/KYC regulatory compliance umbrella required to offer their current (and growing) set of digital currencies[1][2].
This is purely speculation but: since it's on the Ethereum chain anyone can see the history of tokens on any account, and as long as the tokens only move between accounts that are known then that should be good enough. They could very well make it so that if you transfer tokens outside of accounts controlled by or known to the exchanges then those tokens will become tainted and no longer redeemable.
I believe USDC has a blacklist of "forbidden addresses" - this is in contrast with some other compliant ERC20s that have whitelists instead. To redeem USD from USDC (meaning withdrawing said USDC from circulation), the withdrawer goes through the same AML/KYC process with Coinbase or Circle before receiving USD in a bank account.
