The reserves underpinning the stablecoin USD Coin (USDC) will be consolidated into cash and US government treasuries, according to Coinbase president and COO Emilie Choi.
USD Coin’s reserves will soon be exclusively kept in “cash and short duration U.S. Treasuries,” according to a blog post published on Aug. 22 by the CENTRE Consortium, a joint venture between leading U.S. crypto exchange Coinbase and blockchain financial services startup Circle that issues USDC.
Choi attributed the policy change to a response from USDC’s reserves increasing beyond cash, cash equivalents, and U.S. Treasuries in May, according to Choi on Twitter.
The adjustments to USDC’s reserves were not announced until July, adding to public anxiety about the stable coin’s stability.
4/ When Circle shared their May report about USDC reserves in late July (which included a more diversified pool of investments for the first time) we should have moved faster to update statements like that on our website. That was a mistake and Coinbase takes ownership for that.— Emilie Choi (@emiliemc) August 23, 2021
Choi stressed that the new policy would take effect in September, stating that USDC’s next two attestation reports continue to prove the stable token’s reserves are held in a diversified portfolio.
The blog post said, “These improvements are being implemented swiftly and will be reflected in future attestations by Grant Thornton.”
According to the USDC’s May attestation report, the currency is backed 61 percent by “cash and cash equivalents” and 12 percent by US Treasury bonds.
Certificates of Deposit denominated in US dollars accounted for 13% of the token’s backing, with commercial paper accounting for 9% and corporate bonds accounting for 5%. Municipal bonds made up 0.2 percent of the stablecoin’s backing as well.
Since its introduction in September 2018, USD Coin has amassed a market capitalization of approximately $28 billion and spread to five distinct blockchains.
USDC was set to deploy over ten blockchain networks in June, according to Centre.
