Circle continues to increase reserves for USDC
Circle continues to increase reserves for USDC
Stable Coin

Circle continues to increase reserves for USDC

By George Michael Belardinelli - 10 Jan 2023

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The news provided by Circle itself in its latest report about the management of the fledgling reserve fund is well received by investors in both the stable USDC and the crypto world in general, who see the entry of banks into the industry as a transparency move. 

Circle is a company established ten years ago now (2013) by Jeremy Allaire and Sean Neville, it deals with peer-to-peer payments and its stablecoin is USDC. 

Circle wanted to intervene by communicating the start of some “anomalous” relationships for a crypto company but which the community of this fantastic asset has welcomed very favorably recognizing the move as a sign of openness and transparency. 

Circle: BlackRock manages 30% of USDC reserves

The company, in its latest report reveals how 75% of the reserve fund (Circle Reserve) is composed of US Treasury bonds and $12.79 billion is in the hands of investment bank BlackRock (NYSE: BLK).

According to the attestation report issued, Circle has 30% of USDC’s reserves.

As of early October of last year, the US company had set aside $43.4 billion in USDC reserves against a circulating supply of 43.23 billion USDC

32.2 billion (75%) of the total reserves are in US Treasury bills while 11.15 billion are in fiat currency collateral at the country’s most trusted banks.

The Circle Reserve Fund was established to guarantee the stability of the Circle project and partly as collateral for stablecoin in early November last year and holds $28.6 billion (65%) of the crypto. 

BlackRock’s intervention in the fund has caused uproar in the cryptocurrency world, and John Paul Koning, a well-known analyst, was keen to point out that the banking institution’s intervention is a sign of the asset’s maturity and good for USDC investors. 

Speaking on the subject, John Paul Koning expressed himself in a tweet in these terms from his profile:

“This seems like a win for USDC users. Circle is yielding some of its control over USDC’s reserves to an external manager subject to SEC regulation, which ultimately makes USDC safer. Transparency improves too, since USDC users can now get regular updates from BlackRock.”

The fiat currency portion of the collateral is not exclusive to BlackRock, in fact since its intervention, Circle has continued the practice by involving major US banks. 

US lending institutions where the company holds foreign exchange reserves include Bank of New York Mellon (NYSE: BK), Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank (NASDAQ: SBNY), Silicon Valley Bank and finally Silvergate Bank.

The move to involve BlackRock in the management of the Circle Reserve Fund is an opening that in the opinion of leading analysts makes Circle, and its stable USDC, a safer investment than it was in the past, and because of the regulations it indirectly undergoes by opening up to banks, it is also more transparent. 

George Michael Belardinelli

A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality

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