A consortium including Coinbase Global
The reallocation of the assets backing USDC, a $27 billion stablecoin, marks a swift change from July when consortium member Circle Internet Financial said that the reserves included corporate bonds and commercial paper.
Until August, Coinbase’s website falsely described USD Coin as backed completely by dollars “in a bank account.” The company changed the description after being contacted by Bloomberg News earlier this month.
In a series of
Choi said USD Coin’s reserves will consist entirely of cash and short-term Treasurys starting in September.
Circle and Coinbase have said that users can always exchange one dollar of USD Coin for an actual dollar that can be deposited in a bank account.
Centre, the consortium that includes Coinbase and Circle, revealed in July that 61% of the reserves were in risk-free assets like cash and its equivalents, but that some of the reserves were in assets that contain some risk of default, such as corporate debt and certificates of deposit with foreign banks. An additional 12% of the funds were in Treasury bonds, which aren’t considered a default risk but also aren’t as liquid as cash.
Aaron Brown, a crypto investor who writes for Bloomberg Opinion, says it gives the consortium less ability to diversify, which could be important down the line.
“The old investment rules for USD Coin were perfectly sound,” said Brown. “Circle is making a splashy announcement to address a problem that doesn’t exist, in hopes of making itself seem more prudent than rivals.”
Tether, the largest stablecoin and one widely used to trade bitcoin, has also in the past
That’s caught the eye of regulators in Washington, who have grown wary of the rapidly growing world of stablecoins — whose
Bloomberg News
Among stablecoins, USD Coin’s market value trails only Tether’s $64 billion. Circle said last month it was set to go public in a merger with special purpose acquisition company. The deal