- A new attestation by accounting firm Grant Thornton shows the composition of the reserves backing Circle’s USD Coin stablecoin
- 61% of the reserves consists of cash and cash equivalents (Government Obligation Money Market Funds)
- The remainder consists of Yankee CDs, US Treasuries, commercial paper, corporate bond and municipal bonds
As it prepares to go public, Circle reveals the types of assets backing USD Coin
Circle has published a breakdown of the reserves backing the USD Coin stablecoin, was included in an attestation report by accounting firm Grant Thornton. This was already the 33rd attestation indicating that USD Coin is sufficiently backed, although it’s the first time that a more specific breakdown of the types of assets backing USD Coin is included.
As of May 28, 2021, the largest portion of the reserves backing USD Coin were cash and cash equivalents, which constitute 61% of the reserves. This category consists of deposits at banks and Government Obligation Money Market Funds.
Yankee CDs (certificates of deposit) and US Treasuries represented 13 and 12 percent of the reserves, respectively. The remainder of the reserves consisted of commercial paper (9%), corporate bonds (5%) and municipal bonds (0.2%).
In May, USDT’s issuer Tether also published a breakdown of the USDT stablecoin’s reserves. When comparing the compositions of the reserves backing USDT and USDC, a stark difference is immediately noticeable – commercial paper constituted 65.39% of USDT’s reserves, while it only made up 9% of USDC’s. Per Investopedia, commercial paper is “unsecured, short-term debt issued by a corporation”.
USD Coin currently has a market capitalization of about $22 billion, and is the second largest stablecoin behind USDT. In the last 24 hours, the coin saw almost $2 billion worth of trading volume across the exchanges tracked by CoinCodex.
The increased transparency regarding USD Coin’s reserves comes amidst Circle’s plans to become a publicly-traded company. Earlier in July, the company announced that it reached a deal to merge with Concord Acquisition Corp, a SPAC listed on the NYSE. The deal is expected to close in Q4 2021, and values Circle at $4.5 billion. Here’s what Circle CEO Jeremy Allaire had to say:
“As we continue our journey to becoming a public company, we will have increasing opportunities for greater transparency, accountability and disclosure around our broader business and operations. Altogether, this expanding public accountability can help to strengthen trust in Circle, USDC and companies building on the standards and market infrastructure that we have been delivering over the past several years.”