Circle reveals USDC liquidity and availability in reserves
The entire crypto space has felt a negative impact from the failure of the UST algorithmic stablecoin and the native Terra token, LUNA. Other stablecoin projects like USDT and Tether’s Circle (USDC) received more pressure from different angles.
Many crypto investors and participants began to doubt the stability of stablecoins with the collapse of the Terra ecosystem. Several others have recently called for more transparency on the reserves and financial status of these stablecoins.
Disclosure of project bookings is key to gaining client trust and attracting potential investors. In addition, it shows that the project has enough liquidity to face any situation. Therefore, even in the event of a sudden panic sale, it could easily liquidate all asset holders in the shortest possible time.
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However, the lack of sufficient reserves for a stable currency could be devastating. There is a potential collapse once user pressure builds on withdrawals as they move towards more viable projects. There could be a distortion with investment plans for investors if a project does not have cash on hand.
In line with popular requests, Circle Internet Financial revealed USDC reserves in its first monthly report. The company made this disclosure stating that project assets were in storage as of June 30, 2022. According to Circle, USDC reserves are held in cash and 3-month US Treasury bills.
Circle’s monthly report has an amount that matches the USDC market capitalization from CoinMarketCap data. The company recorded its total reserves of around $55.7 billion. It includes two parts; the first for 42,122 million dollars and the second for 13,500 million dollars.
The company invested the first part of the reserve in US Treasury bonds. The second part is held in cash and invested in regulated financial institutions in the United States.
Interactions between the circle and regulators
Additionally, Circle said it has good interactions with regulators. Speaking on behalf of the company, Chief Financial Officer Jeremy Fox-Green commented on USDC compliance since its inception in 2018.
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He maintained that the company had complied with all audits and recommendations from regulators, including the SEC. Additionally, it revealed that the company receives a monthly certification on the adequacy of the reserves and compositions of its project. These come mainly from the best accounting firms in the market and other third parties.
With transparency and respect for regulations, Circle and Tether move forward through their innovative approaches. There are notable new projects from companies following other fiat currencies.
Circle has its EUROC, a stablecoin pegged to the euro, while Tether’s latest new coin is pegged to the Brazilian real. In general, participating cryptos are seeing more transparency recently thanks to more stable projects.
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Even Tether has announced its intention to reduce investor fear and nervousness by reducing paper reserves to zero.
Circle Featured Image, TradingView.com Chart
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