Circle CEO: No longer holding US Treasury bonds maturing after June to avoid risks associated with potential US government debt default

The issue of the US debt ceiling continues to simmer in recent days. Despite the passage of a bill last month to raise the debt ceiling by $1.5 trillion, the Biden administration's unwillingness to accept conditions on spending cuts has left the issue unresolved. In response, Circle, a major holder of US Treasury bonds, has decided to only hold US Treasury bonds that mature within the next six months to avoid potential default risks.

Circle will no longer hold US Treasury bonds maturing after June

According to Politico, amid the current debt crisis in the United States, Circle has adjusted the reserve assets backing its USDC stablecoin. Circle CEO Jeremy Allaire told Politico reporters that the company will no longer hold US Treasury bonds maturing after early June.

"We don't want to take on the risk of the U.S. government defaulting on its debt," Jeremy Allaire said.

Reviewing the data on Circle's reserve assets confirms Jeremy Allaire's statement, showing that the latest maturity date for the bonds held by Circle is May 31.

Furthermore, examining Circle's March reserve report reveals that as early as March, Circle had already pushed all bond maturity dates to before the end of May, with the latest bond maturing on May 25.

Debt Ceiling Issue Still Unresolved in the U.S.

As previously reported, the U.S. government is facing a deadlock over whether to raise the debt ceiling. Treasury Secretary Yellen wrote to Congress last week, stating the need to raise the debt ceiling promptly as the Treasury's cash is expected to run out in early June given the current circumstances.

Additionally, Federal Reserve Chairman Powell emphasized in a press conference last week that failing to raise the debt ceiling in a timely manner would plunge the U.S. economy into a quagmire with severe consequences.

If Congress ultimately fails to raise the federal debt limit, it would lead to the U.S. not having enough funds to pay its debts, triggering economic and financial disasters. However, as explained in another article, the probability of default due to the debt ceiling is actually low, as parties view the debt ceiling as a tool to constrain their opponents.

Currently, the House Republican caucus passed a bill last month that could raise the $31.4 trillion debt ceiling by $1.5 trillion, contingent on spending cuts such as canceling student loan debt. However, the Biden administration has indicated it will not accept negotiations involving spending cuts. With about half a month left until June, the deadlock over the debt ceiling remains, leaving nations on edge awaiting a resolution.