Circle CEO Jeremy Allaire said in a statement to Politico on May 10 that his stablecoin firm no longer holds long-term U.S. Treasuries.
Specifically, Circle does not hold Treasuries that mature later than June 2023. Allaire explained the company’s reasoning by stating:
“We don’t want to carry exposure through a potential breach of the ability of the U.S. government to pay its debts.”
The Circle CEO’s comments come after statements made by U.S. Treasury Secretary Janet Yellen. Yellen recently said that the U.S. government could be unable to pay its bills by June 1 and could default on its debt at a later date, leading to widespread public concern.
Circle backs its USDC stablecoin with a variety of assets, including cash, cash equivalents, and Treasuries. According to data from January, about 65% of Circle’s USDC reserves were made up of Treasury bills, meaning that a significant amount of its reserves could have been affected by a default.
The news comes alongside reports from Tether, which revealed today that its USDT stablecoin is backed by $1.5 billion of Bitcoin as well as previously disclosed assets.
Tether’s USDT and Circle’s USDC are the two largest stablecoins in circulation, with market caps of $82.6 billion and $30.1 billion, respectively.
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