Circle, the issuer of the stablecoin USD Coin (USDC), announced that most of its USDC reserves are held in cash and cash equivalents.
Circle, the issuer of the USDC stablecoin, has announced that most of its stablecoin reserves are held in cash and cash equivalents. The company’s CEO, Jeremy Allaire, announced in a blog post yesterday.
According to the blog post, Circle says it has put in place some rules to ensure that the total USDC in circulation is covered on a 1: 1 basis with dollar-denominated assets. The company’s audit report indicates that 61% of USDC is covered by cash and cash equivalents.
The report added that “cThe ashes include deposits in banks and money market funds with government obligations. Cash equivalents are defined as securities with an original term of less than or equal to 90 days in accordance with generally accepted accounting principles (US GAAP).. “
In addition, 13% of the reserve is held in Yankee Certificate of Deposits (a savings vehicle marketed to larger investors and issued by overseas banks seeking to raise capital from US depositors).
The remaining reserves are held in US Treasuries (12%), Commercial Paper (9%), Corporate Bonds (5%) and Municipal Bonds & US Agencies (0.2%). This brings the total to $ 22 billion. However, at the time of this writing, USDC’s total market cap is just over $ 26 billion.
Allaire said the new certification report is part of the company’s goals to become a publicly traded company through SPAC. Therefore the transparency report is necessary. “As we continue on our journey to becoming a public company, we will have more and more opportunities for greater transparency, accountability and disclosure around our broader business and operations and,” he added.
Circle’s desire for transparency is necessary considering that Tether, the issuer of the USDT stablecoin, has faced numerous controversies in recent years. Tether has been accused of minting and launching USDT tokens without any actual cash reserves.