USDC Issuer Circle Rebalances Treasury Holdings Amid US Debt Ceiling Crisis

• Circle, a stablecoin issuer, is preparing to avoid potential lapse as debt ceiling crisis looms with no agreement in sight.
• The company has adjusted its holdings that back USDC by switching to short-dated US Treasuries to avoid a catastrophic fallout.
• Negotiations on raising the debt ceiling have gotten off to a rocky start as White House talks concluded with no agreement.

Introduction

Stablecoin issuer Circle is preparing to avoid potential lapse as debt ceiling crisis loom with no agreement in sight. Following US Treasury Secretary Janet Yellen’s warning that the government could be unable to pay its bills by June 1st and could default on its debt at a later date, Chief Jeremy Allaire noted that Circle doesn’t want to carry exposure “through a potential breach of the ability of the US government to pay its debts.”

Circle’s Adjustments To Avoid Catastrophic Fallout

As such, the fintech firm has adjusted its mix of reserves that back USDC by switching to short-dated US Treasuries. Circle Reserve Fund Disclosures, which are managed by BlackRock, revealed that current holdings mature no later than May 31. A Treasury bill (aka T-Bill) is a short-term government debt obligation backed by the US Treasury that can have maturities ranging from four weeks to 52 weeks.

Debt Ceiling Negotiations Have Gotten Off To A Rocky Start

The Republicans and Democrats failing to reach a deal might put the country at risk of defaulting on the national debt. To avoid this, both sides will have to raise the debt ceiling. However, negotiations on raising the debt ceiling got off to a rocky start this week as White House talks concluded with no agreement.

Circle’s Recent Acquisition

Recently, Circle acquired Washington D.C.-based brokerage firm SeedInvest for an undisclosed amount earlier this year in an effort expand into venture capital investments and tokenized securities trading. It also recently announced it had raised $440 million in new funding from investors including Fidelity Investments and Coatue Management LLC at a valuation of over $4 billion dollars — making it one of only two crypto startups valued over $1 billion dollars last month.

Conclusion
Circle is taking proactive steps against upcoming risks posed by unresolved issues concerning the US debt crisis situation while continuing their expansion into new markets such as venture capital investments and tokenized securities trading through recent acquisitions like SeedInvest.