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USDC Issuer Circle Rebalances Treasury Holdings Amid US Debt Ceiling Crisis

USDC Issuer Circle Rebalances Treasury Holdings Amid US Debt Ceiling Crisis

Stablecoin issuer Circle has reconfigured its Treasury holdings to ensure it does not hold any that mature beyond the start of June. This is in response to the potential of a US debt default that US Treasury Secretary Janet Yellen recently warned could occur, causing concern for many.

  • Circle’s Chief, Jeremy Allaire, confirmed in an interview that the fintech firm wants to avoid carrying exposure “through a potential breach of the ability of the US government to pay its debts.”
  • To avoid such catastrophic fallout, Circle has now switched to short-dated US Treasuries as a means to back USDC, its US dollar-pegged stablecoin, and has adjusted its reserve fund disclosures.
  • The company’s current holdings mature no later than May 31 and are managed by BlackRock. Treasury bills range from four to 52 weeks and are a short-term government obligation backed by the US Treasury.
  • If US Republicans and Democrats fail to reach an agreement, this may put the country at risk of defaulting on national debt. To steer clear of such an outcome, both parties will need to raise the debt ceiling.
  • Unfortunately, negotiations on raising the ceiling reached rocky ground recently as White House talks concluded without an agreement.
  • In addition to these concerns, Circle’s USDC stablecoin experienced a depeg following the collapse of Silicon Valley Bank (SVB) this year. However, the token has since regained stability with a market cap of $30.12 billion.