Circle Backs USDC With Shorter US Treasurys, Worries US Government Will Default

The US has never “intentionally defaulted on obligations” before, but that’s not stopping Circle from preparing for the worst

article-image

Jeremy Allaire Circle CEO (CC BY-NC-SA 2.0); Source: World Economic Forum / Faruk Pinjo, modified by Blockworks

share

Circle CEO Jeremy Allaire is prepping for a possible US debt default. 

Allaire told Politico that Circle no longer holds Treasurys that mature beyond early June, because the stablecoin issuer doesn’t “want to carry exposure through a potential breach of the ability of the US government to pay its debts.”

Circle issues its stablecoin USDC, which has a market cap of $30.1 billion. 

According to BlackRock, none of Circle Reserve Fund’s Treasurys mature past May 31.

“As part of ongoing positioning to enhance cash and liquidity management of the Circle Reserve Fund, in accordance with the Fund’s prospectus, BlackRock has entered into overnight U.S. Treasury repurchase agreements, or ‘repo’, in the Fund (USDXX),” a Circle spokesperson told Blockworks via email.  

That plan has been “underway for many months,” according to the spokesperson, adding that “the inclusion of these highly liquid assets also provides additional protection for the USDC reserve in the unlikely event of a U.S. debt default.”

A US Treasury bill is a short-term government debt obligation backed by the US Treasury. Typically, the maturity on the bill ranges from four weeks to 52 weeks.  

The US is at risk of defaulting on the national debt if Republicans and Democrats cannot reach a deal. Both sides need to raise the debt ceiling to avoid a default.

Treasury Secretary Janet Yellen warned in early May that failing to raise the debt ceiling could lead to an “economic catastrophe.”

The deadline for the raise could come as soon as June 1 after federal tax revenues in April came in below their previous projections.

The US has never “intentionally defaulted on its obligations because of the debt limit,” according to a 2021 White House blog post

If the US were to default, then payments and other core functions of the federal government, including lending, would be unable to function. 

Though Allaire’s comments show concern for the potential of a US debt default, Avi Felman and Jonah Van Bourg told Blockworks on the 1000X podcast that there may be an opportunity for crypto.

Updated May 10, 2023 at 6:21 pm ET: Adds comment from a spokesperson for Circle.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

The startup says it aims to rival Stripe and Worldpay by using stablecoins to speed merchant settlements from days to seconds

by Blockworks /
article-image

“S&P 500” for crypto comes as segment gains “established role in global markets,” S&P exec says

article-image

The S&P Digital Markets 50 Index combines 15 cryptocurrencies with 35 crypto-linked companies, offering investors hybrid exposure

by Blockworks /
article-image

Gnosis is betting that openness — not ownership — will define the future of onchain money

article-image

Crypto’s quest to imbue shareholder protections for tokens

article-image

Grass previously raised a seed and Series A rounds and plans to utilize the token purchase to execute on its roadmap