Circle has disclosed the reserves backing the USDC stablecoin

Circle, which manages the USDC stablecoin, has released its first monthly report about the assets that support this stablecoin. The report analyzes the assets held by the company until June 30, 2022.

Report on the assets backing the USDC stablecoin

According to the report, Circle holds $55.7 billion in reserves, compared to USDC's market cap of $55.3 billion. This means that the company has enough reserves to guarantee the value of the stablecoin.

Circle's reserves consist of cash and 3-month US Treasuries, which are more liquid in the market. In this way, it has the ability to return the assets of its customers in a short period of time. Of total reserves, $13.2 billion is in cash, while $42.5 billion is in government bonds.

Jeremy Fox-Geen, Circle's chief financial officer, also highlighted the company's good relationship with regulators. Since its launch in 2018, Circle has received monthly certifications from leading third-party accounting firms on reserve adequacy and composition.

In addition, Circle has ensured compliance with all audits required by regulatory authorities along with their recommendations. In this sense, the new audit strengthens the company's commitment to transparency.

At the same time, Circle is looking to expand its range of stablecoins to include other global currencies, such as EUROC, a stablecoin backed by the euro.

When a currency is not properly secured, the pressure from customers trying to withdraw their funds and switch to a more reliable asset can lead to a spiraling effect that ends in a crash. This happened with the UST stablecoin.

More transparency for stablecoin projects

After the fall of UST, the stablecoin market experienced a brief period of investor distrust. Tether, the issuer of USDT, has felt it the most, and its market capitalization has fallen by almost $20 billion over the past three months.

For example, USDT lost its parity against the US dollar for several days, while the USDC stablecoin was unaffected. Due to this fact, Tether Limited has started working to reduce the amount of commercial securities in its reserves, which is considered a high-risk investment.

On the other hand, USDC's reserves increased by $5 billion over the same period, but the company had to deal with rumors of possible bankruptcy. This shows that stablecoin projects are increasingly under pressure from investors demanding more transparency.

According to its report, Circle does not have commercial paper listed as an underlying for USDC, which theoretically makes the stablecoin safer. And this is exactly the kind of security that the market now demands from projects that work with billions of dollars a day.

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All content in this article is for informational purposes only and does not in any way serve as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.