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Hold on...Circle was just keeping $3.3B in regular deposits? Am I understanding this correctly? I'm not a treasury expert but this seems...insane?

• foepys 4y ago
  Putting everything into US treasury bonds is what sank SVB, so putting everything into AAA rated bonds isn't safe either.
  • xuki 4y ago
    SVB bought long duration bonds, they could not wait until maturity to get the money back. Keep rolling short duration bonds would be less risky.
  • quickthrowman 4y ago
    The interest rate risk of a 10y t-note is a couple orders of magnitude higher than the interest rate risk of a 1 month t-bill, because of duration. USDC would have to wait just over a month for all of their t-bills to mature, SVB was looking at waiting 8 years. Massively different risk profiles.
• fallingknife 4y ago
  You have to have liquid dollars in inventory to manage USD redemptions. Banks have to keep 10% of deposits on reserve at the Fed, so $3.3 billion in cash out of $40 billion is actually on the low side.
  • shawabawa3 4y ago
    The fed recently reduced reserve requirements to zero, so banks need exactly zero cash on hand to fund withdrawals shockingly And circle had ~$10B is cash at banks for redemptions, $3.3B of which in SVB
    • throwayyy479087 4y ago
      Gonna need proof. Doesn’t sound like something the Democrats would do.
      • chrisbolt 4y ago
        https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm
  • funstuff007 4y ago
    but not really too much. t-bills settle t1. i.e. you can get all your money into cash in 24 hours.