December 6, 2023

Stablecoin issuer Circle has reportedly adjusted its treasury reserves to mitigate risk US debt default.

in progress banking crisis In the U.S., Circle CEO Jeremy Allaire said on May 10 that the company had changed reserve support Its U.S. Dollar Coin (USDC) avoids possible embroilment in a U.S. debt default by transitioning to short-term U.S. Treasuries.Allaire explain The Circle no longer holds U.S. Treasury bonds maturing after early June to minimize debt risk.

“We don’t want to take the risk that the ability of the U.S. government to service its debt could be undermined,” the executive said.

The Circle Reserve Fund, managed by Blackrock, disclosed that its holdings expire no later than May 31.

Treasury Secretary Janet Yellen recently said the administration would have to make a “decision” if Congress failed to raise the federal debt ceiling. Should the country default on its debt, the $24 trillion Treasury market and the global financial system could suffer major disruptions. Currently, U.S. President Joe Biden and Republicans are at odds over raising the $31.4 trillion borrowing limit.

Another stablecoin issuer, Tether, claims the majority of its reserves are invested in Treasury bills with an average maturity of less than 90 days. According to its quarterly assurance report on May 10, the company has been “working hard to take steps to reduce its reliance on pure bank deposits as a source of liquidity.”

In the past year, central bank of the united states Supply has been falling, down 46% from an all-time high of $56 billion in June 2022. This caused its market share to drop to 23%, with a float of $30 billion. In contrast, rival Tether’s market dominance has risen to 62 percent with $82 billion in circulating Tether (USDT).Notably, Circle recently launched a Cross-chain transfer protocol for $USDC Via Ethereum and other EVM compatible chains.

Circle’s USDC stablecoin remains the second-largest stablecoin with a market cap of $30 billion. This year, Circle has experienced turbulent times, with the USDC stablecoin losing its peg in March 2023, resulting in a massive withdrawal of USD tokens and a drop of more than 25% in market value.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.