3 ms·

What are the chances this causes a run on USDC and a total cascading collapse of multiple crypto assets & platforms?

xur17 4y ago
The good news is that USDC has 74% of their assets in short dated US treasuries (weighted average duration is 36 days). Even if they had to sell all of their treasuries TODAY, they'd only be looking at a ~0.4% haircut (assuming an efficient market for treasuries, which should be close to true). Definitely not a good situation, but they're in a lot better position than SVB.
- humanizersequel 4y ago
  I've also been under the (possibly incorrect) impression that the majority of Circle's dealings are with exchanges like Coinbase — parties who are probably willing and able to play some inside baseball in terms of dealing with duration mismatch and waiting out the feds. Edit: Yeah, they are very strict with who they interact with — individuals cannot exchange their USDC for dollars directly with Circle: https://www.circle.com/en/legal/acceptable-use-policy https://www.circle.com/en/legal/acceptable-use-policy.
  - TacticalCoder 4y ago
    > I've also been under the (possibly incorrect) impression that the majority of Circle's dealings are with exchanges like Coinbase Circle belongs to Coinbase AFAIK. EDIT: ah I was wrong, after reading the comment below I googled and Coinbase+Circle created the "Centre" venture and they're 50/50 in it. And Centre is the company which launched the USDC stablecoin. So Coinbase doesn't own Circle but owns 50% of Centre.
    - deleted 4y ago
      [deleted]
- TacticalCoder 4y ago
  > The good news is that USDC has 74% of their assets in short dated US treasuries (weighted average duration is 36 days). Do you have any idea what kind of yield they get on these and what happens to that money? I've never been able to find any info about that.
  - xur17 4y ago
    This link [0] is useful for getting context on what backs USDC, and this link [1] shows what backs the 74%. Looks like an average yield of ~4.4%? [0] https://www.circle.com/en/transparency https://www.circle.com/en/transparency [1] https://www.blackrock.com/cash/en-us/products/329365/ https://www.blackrock.com/cash/en-us/products/329365/
  - shawabawa3 4y ago
    They get 4.4% yield and that goes back to shareholders as equity in the company
- fallingknife 4y ago
  Also, while USDC is like a deposit, legally it isn't. So they are under no obligation to produce USD in exchange on demand. They can (and have) shut redemptions. So they could just wait 36 days for those treasuries to mature instead of taking even that small 0.4% haircut.
deleted 4y ago
[deleted]
evdubs 4y ago
2%
- BeFlatXIII 4y ago
  1/50 chance of maximum popcorn? I'll take it.

The good news is that USDC has 74% of their assets in short dated US treasuries (weighted average duration is 36 days). Even if they had to sell all of their treasuries TODAY, they'd only be looking at a ~0.4% haircut (assuming an efficient market for treasuries, which should be close to true). Definitely not a good situation, but they're in a lot better position than SVB.

humanizersequel 4y ago
I've also been under the (possibly incorrect) impression that the majority of Circle's dealings are with exchanges like Coinbase — parties who are probably willing and able to play some inside baseball in terms of dealing with duration mismatch and waiting out the feds. Edit: Yeah, they are very strict with who they interact with — individuals cannot exchange their USDC for dollars directly with Circle: https://www.circle.com/en/legal/acceptable-use-policy https://www.circle.com/en/legal/acceptable-use-policy.
- TacticalCoder 4y ago
  > I've also been under the (possibly incorrect) impression that the majority of Circle's dealings are with exchanges like Coinbase Circle belongs to Coinbase AFAIK. EDIT: ah I was wrong, after reading the comment below I googled and Coinbase+Circle created the "Centre" venture and they're 50/50 in it. And Centre is the company which launched the USDC stablecoin. So Coinbase doesn't own Circle but owns 50% of Centre.
  - deleted 4y ago
    [deleted]
TacticalCoder 4y ago
> The good news is that USDC has 74% of their assets in short dated US treasuries (weighted average duration is 36 days). Do you have any idea what kind of yield they get on these and what happens to that money? I've never been able to find any info about that.
- xur17 4y ago
  This link [0] is useful for getting context on what backs USDC, and this link [1] shows what backs the 74%. Looks like an average yield of ~4.4%? [0] https://www.circle.com/en/transparency https://www.circle.com/en/transparency [1] https://www.blackrock.com/cash/en-us/products/329365/ https://www.blackrock.com/cash/en-us/products/329365/
- shawabawa3 4y ago
  They get 4.4% yield and that goes back to shareholders as equity in the company
fallingknife 4y ago
Also, while USDC is like a deposit, legally it isn't. So they are under no obligation to produce USD in exchange on demand. They can (and have) shut redemptions. So they could just wait 36 days for those treasuries to mature instead of taking even that small 0.4% haircut.

deleted 4y ago

[deleted]

evdubs 4y ago

BeFlatXIII 4y ago
1/50 chance of maximum popcorn? I'll take it.