Coinbase, Circle to Move USDC Reserves Out of High-Risk Investments
USDC reserves will move out of the current higher-risk investment portfolio and into cash and short-term treasuries starting in September.
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key takeaways
- In July, Circle revealed that while most of USDC is backed by dollars, not all of its reserves are in cash
- In August, Coinbase changed language on its website to clarify that USDC cash reserves are not kept entirely in a bank account
Centre Consortium, which includes Coinbase and Circle, has revealed that all of the assets backing USDC, the world’s second largest stablecoin, will be moved into cash and short-term treasuries.
In July, Circle revealed that while most of USDC is backed by dollars, not all of its reserves are in cash. Some reserves are held in corporate bonds and commercial paper, Circle said. The report contradicted previous claims that USDC is backed dollar-for-dollar in cash.
“This news makes sense,” said Matthew Gould, CEO and founder of Unstoppable Domains.
“USDC is the market leader for the safest and most compliant USD stablecoin. This move further solidifies that positioning.”
In August, Coinbase changed language on its website to clarify that USDC cash reserves are not kept entirely in a bank account, as a previous statement suggested.
The news comes after Tether revealed a breakdown of USDT reserves, of which only 2.6% are kept in cash. The remainder is a combination of secured loans, corporate bonds, crypto holdings and other investment vehicles.
“USDC is trying to win market share and ‘kill’ them with transparency much demanded by institutional players,” said George Zarya, CEO at Bequant. “Liquidity in crypto is still dominated by USDT-based pairs and risk-weary traders can’t get through to it as they wont take USDT risk.”
USDC reserves will move out of the current investment portfolio and into cash and short-term treasuries starting in September, Coinbase president Emily Choi said via Twitter.
“The changes in the investment portfolio for USDC reserves began in May 2021 and will not extend past September,” wrote Choi. “Centre, alongside Circle, will ensure that the USDC investments revert back to a more conservative investment profile by the end of September.”
Users can exchange USDC for $1.00 to be deposited into a bank account at any time, Coinbase and Circle have said.
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