Circle claims that most of the reserves backing its USDC stablecoin are in the form of United States Treasury Bills.
The cryptocurrency startup Circle, the issuer of the stablecoin known as USD Coin (USDC), recently announced that the USDC reserve risk that the company’s important customers were nursing had been removed.
According to what was disclosed in a Press Release published early today (1), the company stated that it will be made whole based on the joint statement issued by the United States Treasury Secretary Janet Yellen and US prudential regulators.
Circle stated earlier that it holds a total deposit worth roughly $3.3 billion in Silicon Valley Bank, SVB Financial Group (NASDAQ: SIVB), the bank whose activities were ordered suspended by authorities in the wake of its run on the banks last week.
In addition, regulators have pointed out that the crypto-centric bank, Signature Bank, poses a systemic danger to its customer base.
As a result of these banks closing, stakeholders’ future is no longer assured. Despite this, the joint release emphasized that the government will not provide financial assistance to SVB equity holders but instead will focus its efforts on protecting depositors.
If this occurs, Circle will be able to retrieve the $3.3 billion it has on deposit with SVB. This amount accounts for approximately 8% of the total USDC Reserve.
According to the corporation, the restricted funding secured with SVB will be made available as soon as banking activities begin on Monday morning.
The USDC issuer has certified that the USDC stablecoin can still be redeemed for a value equal to or greater than one United States Dollar.
“Even in the face of bank contagion influencing cryptocurrency markets, “Trust, safety, and 1:1 redeemability of all USDC in existence is of utmost significance to Circle,” stated Jeremy Allaire, Co-founder, and CEO of Circle.
“Trust is the most important thing to us,” said Allaire.
“It gives us great hope to see the government of the United States and financial authorities taking important steps to limit the dangers posed by the banking industry.
We’ve long argued for full-reserve virtual currency banking that shields our basic layer of digital money & payment services against banking with fractional reserves risk.”
Consumers Get Information Regarding Circle Reserves
In addition, Circle emphasized how well it is financed according to the specifics of its reserve asset, which it disclosed concurrently with the release of the new information.
The majority of the company’s reserve for the USDC stablecoin is reportedly held in the form of US Treasury Bills, as stated by the company.
According to the amount provided, the company’s holdings of Treasury Bills are currently valued at $32.4 billion and makeup 77% of the company’s total collateral.
The company has verified that the T-Bills have short maturities. Because they are direct liabilities of the United States government, they are one of the most liquid assets in the entire globe.
After the USDT, the USDC is the world’s second most widely used stablecoin. After de-pegging to an all-time low of $0.8774 amid the tremendous Fear, Uncertainty, and Doubt (FUD) gripping the ecosystem of the stablecoin, its market value is currently sitting at $40.56 billion at the present time.