Circle has removed all US Treasuries from its $24B reserve fund during the debt ceiling dispute

The stablecoin issuer, Circle Internet Financial, has removed all of its U.S. Treasury bonds from its backing reserves for the USD Coin (USDC) as a precautionary measure in anticipation of a potential fallout from the upcoming U.S. debt ceiling showdown. The Circle Reserve Fund, which is managed by the global investment giant BlackRock, had all of its $24 billion of assets under management in overnight repurchase (repo) agreements as of May 30th, according to the fund’s website. This marks a significant change since the end of April, when the fund held over $30 billion in U.S. Treasury bonds, according to Circle’s monthly attestation. The last Treasury bond worth $4 billion among the fund’s holdings matured on Tuesday, as shown on the fund’s website. Circle made this move in an effort to protect the $29 billion USDC stablecoin from potential turbulence in the bond market while U.S. lawmakers are scrambling for a deal to avert a government default. In early May, Circle CEO Jeremy Allaire stated that the company would not hold Treasury bonds maturing beyond the end of the month in the reserves that back the value of USDC. Additionally, Circle’s reserve fund has been replacing maturing bonds with overnight repurchase agreements over the month. The U.S. House of Representatives is expected to vote on a bill to raise the government’s ability to issue new debt on Wednesday evening. This article has been edited by Nelson Wang.

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