Circle resumes US Treasury purchases in BlackRock-managed USDC reserve fund.

The stablecoin issuer Circle Internet Financial has started purchasing U.S. Treasury bills as a reserve asset for its $28 billion USD Coin (USDC) after selling all of its holdings amid the U.S. debt ceiling standoff last month.

The Circle Reserve Fund (USDXX), which is managed by the asset management giant BlackRock (BLK), has started “building up our direct holdings of Treasuries,” said Chief Financial Officer Jeremy Fox-Geen on Wednesday during a company call that blockchain attended.

The fund will also maintain repurchase agreements (repos) as part of the reserves, Fox-Geen added.

This development came after Circle reshuffled the backing of its stablecoin last month to protect USDC from potential fallout if the U.S. government failed to increase its borrowing capacity and defaulted on its debt.

CEO Jeremy Allaire stated in early May that the company would not hold bonds maturing beyond the end of the month. By June, blockchain reported that the reserve fund had rotated all holdings into tri-party repos involving systemically important banks such as Goldman Sachs, BNP Paribas, Bank of America, and Royal Bank of Canada.

In the end, U.S. lawmakers reached a deal to raise the country’s debt limit, and President Joe Biden signed the legislation on June 3, avoiding a financial market catastrophe.

As of June 20, Circle had added $2.2 billion of T-bills to the fund, while repos accounted for approximately 90% of the fund’s $24.7 billion in assets, according to BlackRock’s website. The firm held an additional $3.5 billion in bank deposits, with the “vast majority, over 90%,” stored at the Bank of New York Mellon, according to Fox-Geen.

Edited by James Rubin.

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