The stablecoin market has changed a lot recently. UST, which was the 3rd largest stablecoin, is dead. USDT (Tether) has fallen in market cap after a lot of users claimed their holdings for USD. And all this time, Circle’s stablecoin USDC has been climbing up and has gotten very close to toppling USDT, the largest stablecoin in the market. The company also reported that USDC is now totally backed by cash and US Treasuries which is a very positive thing.
The reserves behind stablecoin USDC
Circle has recently disclosed all the assets that are backing USDC in a report that was shared on Thursday. This is not an audit report but an attempt by Circle to be transparent about what is backing their stablecoin. It was really important because, after the fall of UST, a lot of stablecoins lost their peg. And even in general, the trust in stablecoins hasn’t been worse than this.
Circle has finally ditched commercial paper, which is a short-term unsecured debt instrument, for more cash and US Treasuries. This makes the reserves backing the stablecoin very superior and ensures that USDC doesn’t lose its dollar peg. In the report, Circle stated that they have $42.1 billion in US Treasury bonds with an expiry date of 29 September, and the remaining $13.6 billion is in cash. The funds are spread across a lot of banks, including Silvergate, Signature, and more.
Circle’s total reserves are around $700 million higher than the total market cap or supply of the stablecoin at $55.7 billion. This makes it not only the 2nd largest stablecoin but the 4th largest cryptocurrency in the market.
Stablecoin markets are getting better
Before the UST fiasco, there was a lot less transparency in the stablecoin market. But now, as investors have started fearing the real truth behind them, companies are proactively trying to win the trust of investors. A while back, USDT announced that they would conduct an audit of their reserves and publish reports. And now Circle completely disclosed what is backing their stablecoin USDC. Investors can be safer if such reports are available all the time.
What are your thoughts as Circle discloses that USDC is now totally backed by cash and US Treasuries? And do you think this will build more trust in the stablecoin? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Putin bans the use of digital currencies as payment methods in Russia.
