Circle returns to a more conservative investment profile for USDC reserves

Coinbase President and COO Emilie Choi posted an update on the reserves of the world’s second largest stablecoin, USDC

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In an Aug. 22 tweet, Choi said

that starting in September 2021, Coinbase’s USDC reserves will be held in cash and short-term U.S. government treasury bonds.

She added that stablecoin has “always been fully backed by reserves equal to or greater than USDC in circulation,” which always gives users the ability to exchange one USD Coin

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At the time of this writing, there were 27.3 billion USDC in circulation, down slightly from 28 billion USDC earlier this month. USDC supply is up 600% so far this year, outperforming rival Tether by three times.

More conservative USDC investments

In May, Circle’s reserves supporting stablecoin expanded beyond cash and cash

equivalents. The company provided a more detailed breakdown of the composition of its reserves in July, adding clarity and insight into the funds supporting USDC.

In this latest announcement, Circle confirmed that they should have been quicker to inform customers of their reserves

:

Given the sentiment of the community, our commitment to trust and transparency, and the changing regulatory landscape, Circle, with the support of Centre and Coinbase, announced that it will now hold its USDC reserve entirely in cash and short-term US Treasury bonds.

Coinbase COO confirmed that these investment portfolio changes for USDC reserves, which began in May 2021, will not extend beyond September. It added that Coinbase will ensure that USDC’s investments revert to a “more conservative investment profile” by the end of next month.

The announcement said Circle is looking to expand its multi-chain versions of USDC beyond the five blockchains it is currently on. It added that it is also in the process of developing new non-dollar based digital currencies in countries on three continents.

Pending audit of Tether

Circle’s main rival, Tether

, has more than twice as many

stablecoins in circulation. According to its report, transparency

ci, there is $65 billion USDT in circulation, most of which runs on the TRON network.

Tether’s growth, however, has lagged behind Circle, with a 210% increase in supply so far this year.

In July, the company’s general counsel, Stuart Hoegner, promised that the audit would come “within months, not years.” According to Hoegner, Tether’s reserves are heavily weighted toward dollars, but also include cash equivalents, bonds, secured loans, cryptocurrency assets and other investments.

With roughly $44 billion issued this year alone, concerns about their backing have grown, and a full audit is strongly anticipated by both users and regulators.

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