Circle Readjusts USDC Reserve Portfolio To Avoid Falling Into US Default Risk
- Circle has adjusted its USDC-backed reserve portfolio to support short-term US Treasuries, thereby avoiding the possibility of a US debt contract breach.
- The Circle Reserve Fund is managed by BlackRock, which no longer holds Treasuries that mature after the beginning of June.
- Tuesday’s $31.4 trillion debt ceiling hike failed to break the deadlock, and the United States could be forced into an unprecedented default in three weeks.
Circle CEO, which issues USDC stablecoins, Jeremy Allaire, said in an interview that Circle had adjusted its USDC-backed reserve portfolio to support short-term US Treasuries, which avoids the possibility of breaching the US debt contract. Allaire said the company no longer holds Treasuries that mature after early June.
According to information disclosed by the Circle Reserve Fund managed by BlackRock, the bonds currently held by the reserve fund will expire at the latest on May 31. The issuer of the largest stablecoin reported on Wednesday. that they have increased their holdings of US Treasuries to $53 billion. Its Treasury bill holdings have an average maturity of less than 90 days. As of Wednesday, USDC has a market capitalization of around $30 billion, according to CoinGecko.
The vulnerability of Circle’s reserves to external shocks came into the spotlight in March when USDC temporarily lost its 1-to-1 ratio to the dollar following the news suggested that $3.3 billion in reserves used to support stablecoins were held at the Silicon Valley Bank collapse. Since then, the token has been stable.
It is reported that face-to-face negotiations between US President Joe Biden and top congressional officials over raising the $31.4 trillion debt ceiling on Tuesday failed to break the deadlock, and the United States could be forced into an unprecedented default in three weeks. However, Biden and leading members of Congress will meet again on Friday to continue discussions, and both sides insist that the United States will not default.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.
Join us to keep track of news: https://linktr.ee/coincu