Group items tagged

The Federal Reserve Bank of New York (NY Fed) has curbed its counterparty criteria for its reverse-repurchase program (RRP) in a way that could prevent stablecoin issuer Circle from accessing the Fed facility. Funds "organized for a single beneficial owner," registered as "2a-7 funds" at the Securities and Exchange Commission (SEC), "generally will be deemed ineligible" under the new rules. The Circle Reserve Fund, managed by global investment management giant BlackRock Advisors, appears to fall into this category. https://www.newyorkfed.org/markets/opolicy/operating_policy_230425

"Back in 2020-21, Circle was investing USDC's reserves in all sorts of riskier assets. Then it shifted to a 100% Treasury bill policy. Why? Circle feared being classified as an 'investment company' as defined in the Investment Company Act of 1940." (HT @jp_koning) See page 70 here: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001876042/d372f208-1c41-4909-b529-f2b0614fc1ea.pdf

"U.S. dollar-backed blockchain tokens are surging in popularity around the world, and this time much of the demand is for payments in normal business transactions, not just to move money quickly between cryptocurrency exchanges. Over the past several weeks, Circle have seen explosive interest and growth in USDC. There is clearly very significant global demand for digital dollars, and the use of digital dollars as a new payment medium."

It has been previously reported that the publication of Circle's USDC stablecoin attestation reports have become very tardy. However, JP Koning also notes that between February and March 2021, the reports have gotten a bit less transparent. Circle no longer discloses the precise amount of U.S. dollars it holds in custody. Whereas they used to say "US Dollars held in custody =..." in March they started saying "US Dollars held in custody accounts are at least equal or greater than the USDC tokens outstanding..." One possibility is that Circle is investing in assets that cannot be easily valued, and going down the same slippery slope as Tether.

Circle announced that it will be offering investors the opportunity to deposit USDC and earn as much as 7% annually through high-yield accounts with locked-in terms ranging from one month to a year. The interest is paid out in USDC, generated by Circle lending the digital dollars to a network of institutional investors that are willing to pay an interest rate for access to additional capital. The service will launch imminently in the U.S. and Switzerland. The Gemini exchange offers a similar scheme called "Gemini Earn" based on Gemini Dollars (GUSD) that promises returns of up to 7.4% annually.

Circle published a breakdown of the assets backing its USDC stablecoin in its latest attestation report. According to the report, on May 28 bout 61% of its tokens were backed by cash and money market funds. Yankee certificates of deposit (i.e., issued by non-US banks) comprise a further 13%, short-term U.S. Treasury securities account for 12%, unsecured commercial paper accounts for 9%, and the remaining tokens are backed by unsecured short-term municipal and corporate bonds. By "short-term" is meant a maximum term to maturity of three years, and the overall portfolio weighted average maturity is limited to 1.5 years. There are also credit rating limits based on S&P scales. The overall portfolio must main an average credit rating must of A or better, commercial paper holdings must be rated A1 on the short-term scale, and for bonds issued by corporations and financial institutions must be rated BBB+ or higher on the long-term scale.

Payments startup Circle is pivoting its business to solely offering stablecoin services with the sale of its OTC trading desk. As part of the move, the firm confirmed the departure of additional executives, just weeks after co-CEO Sean Neville announced he would be stepping down.

Circle and Coinbase have announced an upgraded version of the USDC stablecoin - which is managed by the Centre Consortium - including the addition of so-called gasless sends. The "USDC 2.0" update will allow services that offer USDC support to pay transaction fees - known as gas on the Ethereum network - for their users. This allows developers to either provide that service themselves, or allows a third party service to pay the related fees, so developers can either pay the fees on behalf of the customer or present and deduct the fees in USDC. https://medium.com/centre-blog/centre-consortium-announces-release-of-usd-coin-version-2-0-37ee8b27e09b

In August, Circle announced it would shift the assets backing its USDC stablecoin out of commercial paper and only invest in "cash and short US Treasuries." However, although its latest attestation shows this transition is complete, it is not classifying anything that matures in 90 days or less as CP (see below). Tether is already reporting at this level of granularity, disaggregating "cash and cash equivalents" into its component parts, so why can't Circle do the same?

Circle, the fintech company behind the USDC stablecoin, intends to become a US Federally-chartered national full-reserve commercial bank, according to its S-4 special-purpose acquisition company (SPAC) filing with the U.S. Securities and Exchange Commission. The firm said that a banking framework could reduce the risks around its business, including its reliance on third-party payment systems.

The Centre Consortium announced that USD Coin (USDC) stablecoins will only be backed by cash and U.S. Treasury Bills. Centre oversees which entities are allowed to issue the stablecoin and use its API. In July, its parent company Circle, which issues the USDC, revealed that USDC was only 61% backed by cash (including money market funds) and cash equivalents (high-quality short-term fixed income securities). The July attestation report showed that reserves included Yankee Certificate of Deposit (13%), commercial paper (9%), corporate bonds (5%) and municipal bonds and U.S. Agencies (0.2%).

Circle, the issuer of USD stablecoin, is pushing forward with its plans to submit an application to operate as a U.S. crypto bank, CEO Jeremy Allaire told Bloomberg. If approved, the startup would be the fourth federally chartered crypto bank in the U.S. Allaire added that his company and the U.S. Office of the Comptroller of the Currency, which facilitates bank charters, have been talking about Circle's digital asset banking prospects among other related topics such as the interoperability between blockchains.

USD Coin (USDC) stablecoin issuer Circle has announced the mutual termination of its proposed merger with special purpose acquisition company (SPAC) Concord Acquisition. The deal was announced in July 2021 with a preliminary valuation of $4.5 billion and was then amended in February 2022 when Circle's valuation ballooned to $9 billion. USDC is currently the 2nd largest stablecoin in circulation, with a market cap of $43 billion.

In a recent blog post, the world's largest stablecoin issuer Tether mocked its smaller competitor, Circle (which issues USD Coin), for being unprofitable. In Circle's first quarter of 2022, it was $113 million in the red, whereas according to JP Koning's estimates based on an analysis of Tether's six attestation reports, Tether earned $13 million over the twelve months ending March 31, 2022. Going forward, both Circle and Tether can be expected to earn much more interest income on their base of non-interest-paying customer deposits, but Tether may face losses on its possibly riskier investments, including $62.8 billion in the collapsed lender Celsius, which is probably worthless now.

Circle CEO Jeremy Allaire announced that company will now provide weekly attestations concerning stablecoin USD Coin (USDC) reserves and liquidity. According to the latest week's figures, all $52.9 billion USDC in circulation are fully backed by cash ($12.8 billion) and short-dated U.S. Treasury securities ($40.2 billion expressed in terms of fair market value) held at U.S. regulated financial institutions on behalf of USDC holders. This weekly reporting is in addition to the the monthly attestation reports which, like Tether's, are published with long lags.  The last one (covering the accounts as of March 31, 2022) was published at the end of April.

"Circle will launch USDC natively on Celo to further everyday adoption of digital currencies and assets. Celo is a carbon-negative, mobile-first, EVM-compatible blockchain built for the real world. USDC is the leading regulated digital dollar powering payments and access to a stable store of value worldwide."

Circle has published the latest third-party (Grant Thornton) audit of its USD-pegged stablecoin, USD Coin. It states that as of end-April there were 293,184,174 USDC issued and $293,351,374 in the firm's reserves.

Due to mounting regulatory pressures in the United States, the Circle is moving the majority of its exchange operations to Bermuda, where it received a full Digital Assets Business Act license its crypto exchange Poloniex. 70% of Poloniex users hail from beyond the U.S.

This Circle Research report identifies innovative work by the technical community on developing and experimenting with sustainable governance and funding models and the analytical community on creating innovative ways to evaluate crypto networks.

Circle's business clients can now sign up for the Circle Business Account, a toolbox of APIs that allow developers to build on top of its USDC stablecoin.