When you withdraw USDC, you essentially initiate the reverse process, exchanging a crypto-native token for the real-world asset it represents. In the case of withdrawing USDC for USD:
 

1. A user with USDC requests a withdrawal from a USDC issuer

2. The issuer takes the user’s USDC and sends a request to the USDC smart contract to take that USDC out of circulation

3. The issuer sends USD from its reserves to the user’s bank account (net of any fees)