In the midst of the current banking crisis in the United States, stablecoin issuers such as Tether and Circle are moving their reserves to the safest instrument, the US Treasuries.
In recent development, usdc stablecoin issuer circle reported that it has recently adjusted its treasury reserves to hedge against the risk of a US debt default. Circle CEO on Wednesday, May 10 jeremy allaire It was evaluated by saying that the firm adjusted the mix of reserves backing the stable currency USDC by switching to shirt-dated US Treasuries.
Allaire said Circle no longer holds Treasuries maturing beyond the beginning of June because they do not want to take the risk “through a potential breach of the US government’s ability to service its debt.”
“We do not want to take exposure through a potential breach of the US government’s ability to pay its debt,” Said Allaire. Current US Treasury holdings by Circle do not mature beyond May 31, according to disclosures coming from the Circle Reserve Fund managed by BlackRock.
Circle’s USDC stablecoin is still the second largest stablecoin with a market capitalization of $30 billion. Earlier this week, US Treasury Secretary Janet Yellen said the Biden administration would be forced to make a decision if Congress could not reach a consensus on raising the debt ceiling.
Currently, the Biden administration and Republicans are at loggerheads over raising the $31.4 trillion borrowing limit. The US is currently very close to defaulting on its debt. Thus, failing to raise the debt ceiling could spell disaster for the global financial system.
tether vs circle
In the midst of the current banking crisis in the United States, stablecoin issuers such as Tether and Circle are moving their reserves to the safest instrument, the US Treasuries. in my condition reportsTether notes that they have moved most of their reserves to US Treasuries.
Circle has had a turbulent time so far this year, due to lose the first peg of the USDC stablecoin due in March 2023. This led to huge outflows from USD Coin, whose market cap fell by more than 25% over the past month. Despite this, USDC is currently the second largest stablecoin with a market cap of $30 billion.
Over the past year, the supply of USDC in the market has declined by 46%. Last month in April, Circle CEO Jeremy Allaire attributed USDC’s shrinking market cap to the current banking crisis and the SEC’s war on crypto.
Bhushan is passionate about Fintech and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
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