USDC to consolidate reserves into cash and treasuries
Emilie Choi, Coinbase CEO and the president, has recently announced that all reserves backing stablecoin USD Coin (USDC) will be consolidated into US government treasuries and cash.
Coinbase and Circle blockchain services, in collaboration issue the USDC, represented by a standard firm – CENTRE Consortium through a post on August 22 made it public that USD Coins’ reserves will be subsequently held in the form of “cash and short duration US treasuries.”
Choi made the announcement on Twitter, attributing the policy change an outcome of enormous backlash against USDC’s reserves for expansion beyond cash equivalents as of May 2021. As USDC reserves grew beyond US treasuries and cash, no changes were reported till the end of July hence triggering significant public concerns regarding the stable coin’s backing.
Clarifying the queries around USDC’s valuation, Choi took to Twitter and emphasized that the new conversion policy will be implemented starting September, simultaneously noting that USDC’s two upcoming attestation reports constantly show a diversified portfolio for the stable coin’s reserves.
The blog post added that the changes would be in effect expeditiously, reflecting in all future attestations by Grant Thornton.
July’s USDC attestation report for May had revealed that the token was backed 61 per cent by “cash and cash equivalents,” and 12 per cent by US treasuries. Certificates of Deposit denominated in US dollars represent 13 per cent of the coin’s backing, whereas commercial paper comprises 9 per cent. Corporate bonds account for 5 per cent, and Municipal bonds also represent 0.2 per cent of the stable coin’s backing.
After its launch in September 2018, USD Coin has grown to a whopping $28 billion market capitalization, expanding across five different blockchains. According to news reports by the Centre in June, not getting any slower in its popularity timeline, USDC is slated to launch across ten more blockchain networks.