Stablecoin issuer Circle adjusted its reserve treasury in an effort to reduce the risks of defaulting on its debt in the United States.
According to a May 10 Politico newsletter, Circle CEO, Jeremy Allaire, said the firm has adjusted the reserve mix backing its USD Coin (USDC) by switching to short-term US Treasuries to avoid getting caught up in a potential US debt default..
Said The company no longer holds Treasuries due after early June because it wants to avoid debt exposure..
“We don’t want to carry exposure through a potential default on the US government’s ability to service its debts.”
The bottom Circle Reserve Fund, managed by Blackrock, shows current holdings to mature no later than May 31.
Earlier this week, Treasury Secretary Janet Yellen said the government will be forced to make “choices” if Congress doesn’t raise the federal debt limit.
US President Joe Biden and Republicans are in conflict over raising the $31.4 trillion debt limit. The $24 trillion Treasury market and the global financial system would falter if the country defaulted on its debts.
The rival stablecoin issuer Tether claims that most of its reserves are invested in Treasury bills with an average maturity of less than 90 days.
The company stated that it has been “working to take steps to reduce its reliance on pure bank deposits as a source of liquidity.”according to a quarterly assurance report dated May 10.
USDC supply has been shrinking over the past year, falling 46% from its all-time high of $56 billion in June 2022. This has caused its market share to drop to 23%.; it only has a circulation of $30 billion. The beneficiary has been its rival Tether, whose market dominance has increased to 62% with a circulation of 82,000 million USDT (USDT).
In April, Allaire blamed the US war on cryptocurrency and the banking crisis for USDC’s dwindling market cap..
Cointelegraph reached out to Circle for more details on the situation, but had yet to hear back at press time.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.