CNBC on Circle's USD Coin Reserves
CNBC.com writes, "The world's second-largest stablecoin is undergoing a massive change." Their article says, "Digital currency company Circle had claimed its stablecoin, USD Coin, was backed 1:1 by actual dollars in a bank account. In July, it was revealed this was no longer the case, with Circle disclosing in an 'attestation' from auditors Grant Thornton that cash made up just over 60% of USD Coin's reserves. The other 40% was backed by various forms of debt securities and bonds. What constitutes a stablecoin's reserves is important.... [T]hey're pegged to an existing currency like the U.S. dollar or the euro.... Now, Circle says it's changing the makeup of USD Coin's reserves once again, with just cash and U.S. Treasury bonds underpinning the stablecoin." CNBC's piece explains, "Centre, a consortium founded by Circle and crypto exchange Coinbase which developed the stablecoin, unveiled the change on Sunday." They comment in a blog post, "Mindful of community sentiment, our commitment to trust and transparency, and an evolving regulatory landscape, Circle, with the support of Centre and Coinbase, has announced that it will now hold the USDC reserve entirely in cash and short duration US Treasuries." CNBC.com adds, "Tether, the largest stablecoin with $75 billion in circulation, has drawn scrutiny from regulators amid fears it doesn't have enough assets to support its peg to the greenback. Earlier this year, tether's issuer revealed that just 2.9% of its reserves were held in cash. The vast majority of its reserves were made up of commercial paper, a form of unsecured, short-term debt that's riskier than government bonds. This sparked fears that a sudden mass redemption of tether tokens could destabilize short-term credit markets."
