Sponsored Links

Why Regulators Recently Pay a Close Attention to Stablecoin

Views: 4682
20 0
Sponsored Links
Read Time:7 Minute, 5 Second

Funny money !

There was a huge lack of transparency regarding whether the company behind those digital dollars, have a physical dollar backed in the bank or they have nothing more than a funny money.

The three largest stablecoins issuers have all recently reveals these details, which means we can finally find out which of those stablecoins are legit!

Sponsored Links

Revealed details about each stablecoin reserve

Tether, revealed its reserve this year as part of its agreement with the New York department of justice. According to Tether, the USDT in circulation is backed by the following assets:

3.6% in cash
72.25% cash equivalent/ Short terms deposits & commercial paper
12.55% secure loans
9.96% corporate bonds, funds & precious metals
1.64% other investment
Tether reserve
Sponsored Links

Sponsored Links

Circle also revealed its reserve behind the USDC which is as the following:

61% cash and equivalents
13% of Yankee certificate of deposits (CDs)
12% US Treasuries
9% commercial paper
5% corporate bonds
0.2% Municipal bonds
Circle consortium reserve

At the end, there is Paxos which claims that it’s stablecoin in circulation are backed by 96% of cash and cash equivalent and only 4% being backed by US Treasury bills.

96% of cash and cash equivalent
4% U.S Treasury bills
Paxos reserve

Sponsored Links

Why so much debt held by the stablecoin companies?

The answer is Interest, Let’s take Tether and Circle reserve, which is nothing more than a debt in some kind in the form of a loan to public or private institutions.

Tether and Circle, give money to those institutions in exchange of bonds or certificate because they earn interest. If you probably know that all your customers won’t come at once to ask to get their money back same time, lending money to those institutions is a deal to earn interest on that cash.

Leave a Comment

Your email address will not be published. Required fields are marked *

Sponsored Links