• Concerns about a possible U.S. government default have prompted Circle to adjust its treasury holdings, keeping a reserve portfolio heavily weighted toward short-term U.S. treasuries with a maturity date of May 31 or earlier.
• This action was taken out of worry for the potential impact of a U.S. government default on the global financial system and protect the $30 billion reserves underpinning its USD Coin stablecoin from volatility.
• As debate rages on over raising the debt limit, Federal Reserve chair Yellen has warned legislators of the dire consequences of failing to lift it.
Circle Adjusts Treasury Holdings Amid US Debt Default Concerns
Concerns about a possible U.S. government default have prompted Circle, a prominent stablecoin producer, to adjust its treasury holdings in order to protect the $30 billion reserves underpinning its USD Coin stablecoin from market volatility.
Circle Keeps Reserves Heavily Weighted Toward Short-Term US Treasuries
The business has chosen to keep a reserve portfolio heavily weighted toward short-term U.S. treasuries with all assets having a maturity date of May 31 or earlier.
Impact of US Default on Global Financial System Worries Circle
This move occurs as debate rages on among financial experts over raising the U.S. debt limit and some sounding alarm about the growing possibility of a default.
Since the U.S treasury market is seen as foundation of global financial system, this action was taken out of worry for its potential impact in event of a US government default.
Tether Also Reduces Reliance On US Treasuries
The biggest stablecoin’s operator Tether has similarly reduced its reliance on U . S .treasuries recently saying it had increased their holdings with maturities fewer than 90 days up to $53 billion
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Federal Reserve Chair Warns Legislators Of Dire Consequences Of Failing To Lift The Debt Limit
Federal Reserve chair Yellen has frequently expressed to legislators warning them about dire consequences that might follow if they fail to lift debt limit President Joe Biden met congressional leaders address matter but meeting ended with little progress.