Circle’s Reserves Now Worth $55.7B, a New Report Shows

A recent blog post from Circle reveals that the company is holding USDC assets worth $55.7B. The USD Coin holdings consist of cash and US treasuries worth $13.58B and $42.12B, respectively. This reserve amount is Circle’s balance as of June 30, 2022. 

Instilling Transparency 

Circle is gradually adopting transparency as part of its mission to establish trust. One way of accomplishing this goal is by unveiling the company’s reserve assets. As mentioned earlier, Circle holds close to $13.6B in cash. The amount is held by various financial institutions such as Customers Bank, Silicon Valley Bank, and the US Bancorp. 

Treasury bonds, on the other hand, amount to $42.12B with an approximate maturity period of 44 days. According to Circle, the firm is holding this reserve in isolated accounts to benefit every holder.  

What’s more, all holdings are not part of the company’s normal operations. Regulatory provisions also apply since the US state and federal law safeguard the USDC holdings. 

Circle Addresses the Liquidity Concern 

In a separate statement, Circle admits that the crypto industry is currently facing a liquidity crisis. The prices of digital currencies are dropping, making it harder for crypto platforms to maintain adequate liquidity. These platforms will therefore file for bankruptcy or suspend withdrawals to limit the damage. 

Circle believes that digital asset companies should be ready to implement strong risk management strategies to minimize losses. Going by the firm, crypto borrowing/lending institutions conduct relatively risky services. In some cases, a collateral asset’s value could fall or borrowers may fail to pay back their loans. Such scenarios create lower liquidity and make platforms lag behind since they can’t pay their depositors and debts.

Circle follows a strict regulatory framework that helps address this liquidity issue and protect its consumers at the same time. As a regulated platform, Circle distributes USDC through the US state transmission laws. Moreover, the payment company is under the governance of several state banking supervisors. 

Close to 80% of the reserves comprise short-term treasuries while the remaining 20% is held in cash. This mechanism makes 1 USDC redeemable for 1 USD. Over the last 12 months, Circle was able to redeem approximately $180B USDC for USD on behalf of its customers. 

Circle introduced yet another stablecoin known as the Euro Coin (EUROC). The new asset began to trade in the market on June 30, 2022, as a regulated currency backed by the Euro.

Circle Purchases Cybavo

On June 10, 2022, Circle made a deal to acquire Cybavo, an advanced crypto technology firm. According to a blog, the acquisition would help boost the adoption of USDC in the firm. Ideally, Cybavo provides developers with blockchain infrastructures and several Web3 solutions to establish their platforms. 

Hence, the acquisition will help developers create products without worrying about any blockchain management procedures. Circle further looks forward to investing in Cybavo’s research and development (R&D) activities. Funding the R&D lets Cybavo create new products/services that can improve a customer’s experience.