Stabilecoins are under the magnifying glass of the U.S. regulator, who at least in the intentions of Janet Yellen, head of the Treasury, should soon intervene with new laws to regulate the sector.
Is this bad news for the sector? Absolutely not, since USD Coin, the stablecoin that is linked to Circle, has just released a report on the consistency of its assets. That is, on the amount of cash and other securities on hand to support the USDCs issued.
Very reassuring report on USDC’s holdings
The situation – even wanting to apply as much detachment and impartiality as possible – would seem to be rosier than what we saw just a few weeks ago with Tether, with USDC actually holding a countervalue equal to or greater than the amount of tokens in circulation
A better situation than Tether: we explain why
has always or almost always been one of the attack surfaces used by detractors of the cryptocurrency world. For years there have been doubts about the actual consistency of the countervalue of the tokens issued, an issue on which the group intervened last May, reporting and certifying the securities in its possession. A decision of transparency, which however many had found unsatisfactory, because almost half of USDT’s reserves were held in unspecified commercial paper, which could also denote debt securities to companies with uninspiring ratings. By
contrast, what Circle reported for its USDC
seems to be more solid, because we have:
- 61% in cash or equivalent: which indicates either immediate liquidity or products that can be liquidated immediately for the equivalent value. It is the safest portion of reserves.
- 13% Yankee CDs: that is certificates of deposit, also these almost immediately convertible and widely used as a vehicle of savings by institutional investors;
- 12% bonds issued by the U.S. Treasury: very low-yield securities that have a very high level of security, with no real fear that the U.S. will be unable to repay its short-term debt;
- 9% commercial papers: the percentage for Tether was 49% instead – a substantial difference and one that makes USDC enormously safer, at least on paper;
- 5% corporate bonds: securities which may be high risk, but which should not be a problem in such a portfolio.
An uplifting situation then, making USDC a benchmark in the stablecoin space.
pegged to the dollar and that allows us to sleep soundly, in a market phase where many had begun to raise doubts about the real consistency of the reserves of the main stable.
What does this mean for the market?
It also means a lot for institutional investors, with Circle continuing to try to establish itself as the main interlocutor for large investors, also by virtue of its common front with the Coinbase exchange, also conquering the European market.
As far as cryptocurrency investors are concerned, the demonstration of such solidity can only be a sign of confidence for the market in the future. Without having to worry about the stability of the stablecoins that feed the market.