Circle CEO Jeremy Allaire said that Circle Yield users can make early withdrawals without facing the impact of rising interest rates in the crypto market.
Users of the treasury product have loaned Circle USDC for a fixed period of up to 12 months to receive a fixed income. But as a bunch of lenders in the crypto industry has suspended withdrawals because of solvency issues, Circle is looking to buck the trend.
In a blog post on Wednesday, Allaire said the measure was only intended to provide relief to customers who were concerned about “any exposure to the markets during this time.”
“So we have offered all customers with active loans the opportunity to withdraw their USDC from Circle Yield, early, without penalty.”
Circle Yield is a regulated crypto treasury and yield solution targeted at institutional investors, businesses, and corporate treasury leaders. Customers can lend Circle their USDC for a fixed period of one to 12 months, and at a fixed interest rate.
In return, the company will lend the money back to other borrowers who are the making company “with the same term and fixed costs”. According to Circle’s CEO, the Bermuda-registered lender has borrowed about $248 million to do business since the policy “officially launched” in February.
Allaire said Circle Yield is “overcollateralized with a security interest in 125% Bitcoin (BTC) held at a third-party collateral agent.” Basically, that means the platform has enough money in its reserves to pay the interest plus principal to users who lend to it, even if borrowers defaulted.
“As borrowing demand has fallen along with the turmoil in digital asset markets, our rates for new loans have followed. All borrower margin calls have been met on time and…neither Circle nor our customers have incurred any loss.”
According to some observers, there has been much speculation that the company has lost about $500 million in multiple operations. Specifically supposed to pay fees to lenders like Silvergate and Signature. But Allaire dismissed those concerns as baseless speculation.
Circle Yield is “completely separate” from holding stablecoin USDC. The company has a stockpile of about $56 billion. The coin itself has also been the subject of much speculation lately.
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