In the midst of a looming financial crisis, Circle Internet Financial has made significant changes to its USD Coin (USDC) backing reserves. With precautionary measures in mind and an eye fixed firmly on self-preservation, the stablecoin issuer decided to eliminate all U.S Treasury bonds from their reserve fund.
Circle's CEO, Jeremy Allaire expressed concern about potential fallout as lawmakers scramble for solutions in order to avoid government default. Notably, there were concerns regarding potentially disruptive turbulence within bond markets that could threaten more than $29 billion USDC Stablecoins and global investors.
This decision was led by Blackrock investment giant which managed the Circle Reserve Fund holding approximately $24bn worth of assets under management; all kept safe behind overnight repurchase agreements as dated May 30th according to attestation records.
Bringing further attention to this unexpected change came when it became apparent just how great this shift had been since April ended: previously over fifty percent ($30+bn) existed via investments directed into U.S treasuries. There is now only one maturing bond with a value totaling four-billion dollars left listed on their website.
Circle's reserve fund is continuing the process of replacing matured bonds with overnight repurchase agreements and monitoring market developments while taking steps such as risk mitigation measures.
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