• The Breakdown
  • Posts
  • US Gov't Debt Too Risky for Stablecoin Reserves

US Gov't Debt Too Risky for Stablecoin Reserves

Circle and Tether both make major announcements around their reserves

Author

Nathaniel Whittemore
May 18, 2023

The Breakdown First Five - Thursday May 18, 2023

5. Even Filecoin is a Security?

In the latest phase of Gensler’s ‘everything is a security’ strategy, the SEC has declared Filecoin a security. Yes, the same Filecoin the SEC investigated 5 years ago and cleared. Did they sue the Filecoin foundation and give them a right of reply? Of course not. SEC staff just told Grayscale privately in response to a routine trust filing. Due process is such a quaint idea.

4. Binance Cut off in Australia

Chokepoint goes global as Binance is cut off from payment rails in Australia. An independent decision by a payment provider has removed Binance’s access to the instant settlement network, effective with no notice, while bank transfers will be cut off shortly. Card payments still work, however one of the largest banks in the Country banned all payments to the exchange on the same day.

3. Tether Foundation Guard?

Steady lads, Tether is buying Bitcoin. Tether reports making $1.48B last quarter, and announced that going forward up to 5% of profits will be plowed into Bitcoin to bolster unseizable reserves. They’re also sitting on a few billion in gold, just for good measure. Tether claims their stablecoin is fully reserved and they have ample liquidity. Critics are seeing specters of Luna’s Foundation Guard.

2. “America will not default”

Another day, another session of debt ceiling negotiations. President Biden called the talks productive and assured reporters that “America will not default”. House Speaker McCarthy said the President had “finally backed off” his refusal to negotiate. Treasury Secretary Yellen confirmed earlier this week that the debt ceiling will be reached early next month. The clock is ticking!

1. Government debt too risky for Stablecoin Reserves

How things change. Circle now thinks the US Government is too risky to hold its cash reserves. USDC reserves in T-Bills extending past this month have been dumped on fears the Government could default. Circle is instead investing in repo transactions with some of the world’s largest banks. Digital US Dollars, backed by the full faith and credit of Goldman Sachs.

Latest Episodes of The Breakdown

Thanks for reading -NLW