Stablecoin issuer Circle no longer has Treasury holdings that mature beyond early June as it does not want to get tangled in a potential US debt default.
The development follows US Treasury Secretary Janet Yellen’s warning that the government could be unable to pay its bills by June 1st and could default on its debt at a later date, sparking widespread concern.
- In a recent interviewChief Jeremy Allaire noted that Circle doesn’t want to carry exposure “through a potential breach of the ability of the US government to pay its debts.”
- As such, the fintech firm has adjusted its mix of reserves that back USDC by switching to short-dated US Treasuries to avoid a catastrophic fallout.
- Circle Reserve Fund Disclosures, which are managed by BlackRock, revealed that current holdings mature no later than May 31.
- A Treasury bill, aka T-Bill, is a short-term government debt obligation backed by the US Treasury that can have maturities ranging from four weeks to 52 weeks.
- The Republicans and Democrats failing to reach a deal might put the country at risk of defaulting on the national debt. To avoid a default, both sides will have to raise the debt ceiling.
- However, negotiations on raising the debt ceiling got off to a rocky start this week as White House talks concluded with no agreement.
- As for Circle, its US Dollar-pegged stablecoin – USDC – suffered a depeg after the collapse of the Silicon Valley Bank (SVB) earlier this year. The token has since stabilized and is currently sitting at a $30.12 billion market cap.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.