Stablecoin issuer Paxos released a thorough breakdown of all assets kept in reserve last week, and Circle has now followed suit.
USDC stablecoin backer Circle has made public a thorough analysis of the assets behind its growing reserve.
While Circle’s unaudited Thursday report is a first for the firm, it’s a remarkable demonstration of transparency. It was considering the increased scrutiny stablecoins face from regulators around the world following the demise of Terra, which recently heightened.
According to Circle’s financial report, the company no longer holds commercial paper, a short-term, unsecured loan instrument. Circle had 9 percent of its reserves in commercial paper at the end of last year. Still, it later stated that it would switch to cash. Also, the U.S. government bonds as its primary source of funding in the future.
As of June 30, Circle held $42.1 billion in U.S. treasury bonds, according to the Thursday report. These bonds will mature on or before September 29, whichever comes first. In addition, Signature Bank, Silicon Valley Bank, Silvergate Bank, and other licensed financial institutions are said to hold $13.6 billion in firm reserves in cash.
Now that Circle has $55.7 billion in cash on hand, it is slightly ahead of the current circulating quantity of USDC tokens, which is 55 billion tokens high.
Now, a stablecoin called USDC is the fourth largest crypto by market capitalization. An item or currency that is reasonably price-stable, such as the U.S. dollar, serves as a stablecoin’s base value.
Stablecoin Peg Price
Stablecoins are characterized by their capacity to instantly and easily be redeemed for the underlying asset. As a result, the stablecoin will always return to its price peg even in market volatility.
But skeptics within the crypto business and the politicians and regulators who closely monitor it have long questioned the currency’s reliability. Since Terra’s UST, the third-largest stablecoin in the market, collapsed in May due to a lack of reserves, those voices have gotten even more pronounced.
UST deposits on the now-defunct lending system Anchor generated up to 20% returns on Terra’s blockchain, formerly popular for DeFi trading. Stablecoin UST and its stablecoin companion token LUNA fell to zero following a run on Anchor.
Account freezes and bankruptcy proceedings have rocked the once-trusted crypto lending sector. Centralized stablecoin issuers such as Circle, Tether, and Paxos have been under increasing pressure. It is to reassure their customers that their tokens would not suffer the same fate.
Paxos is the stablecoin issuer and custody platform behind the third-largest stablecoin, BUSD. It released the same data on its reserve holdings a few days ago. On June 30, it had $17.5 billion in assets secured by government bills, bonds, and cash, according to its report.
Only Tether, the long-time king of stablecoins USDT, has yet to release a full report on its financial performance. After billions of dollars in token redemptions, the most recent attestation data from late March revealed the company’s $82 billion in reserve assets. This figure, however, is likely to have decreased since then.
“The views and opinions on this Crypto News Website are solely those of the authors and contributors. These views and opinions do not necessarily represent those of iBaseTrading or its partners.”