Cyrptocurrency alone is often under the category of the wild price swings and volatility. However, stablecoins are digital currencies that oppose this design, they hold a more steady value. For instance, if you own $1 stablecoin, then it will always be worth one dollar. It is like you are having a digital version of dollar bill. This digital currencies can help you pay for everyday things regardless risks of regular cryptocurrencies during debt ceiling. However, these currencies are crucial part of the overall crypto system. Now, they hold almost $130bn, a lot money is on the line, then the Treasurey government said they raise debt ceiling for the risk of default. This makes stablecoin companies are worried.
The epitome is Circle, a financial service company that issues one of the world’s largest stablecoins. The U.S. dollar has relations to Circle, it is famous for USDC. Previously, the Bell spoke to Circle’s CEO Jeremy Allaire to discuss about how’s the company doing. This includes the regulation of stablecoins and regional banking crisis. Based on this discussion, Allaire said that the design for USDC is to redeem $1. He believes that his own self-imposed approach leads to the safest reserve and the most liquid dollar assets in the world. Historically, 80% f USDC reserves had been in short-term US government Treasury bonds. It means that 90-day or less Treasury bonds.
Previously, the company gaved a situation where holding Treasury bills that mature after May 31. The government can’t pay them, and they are not able to pay their debt. The dollar itself would de-ped, due to the short term Treasury bonds. Thus, it became the reference point for cash and collateral in the broader financial system. So far, the company took measures to involve proactively that they don’t hold T-bills that matured beyond May 31.
