REGULATION

Stablecoin | CEO Clarifies Rumors of USDC Collapse; USDT Reduces Commercial Paper Holdings Again

share
Stablecoin | CEO Clarifies Rumors of USDC Collapse; USDT Reduces Commercial Paper Holdings Again

Recently, not only USDT, but also the usually compliant USDC has been rumored to have risks within the community. The issuer of USDC, Circle, founder released a statement to clarify this; USDT further reduced its commercial paper holdings, but the proportion of USDT in the Curve 3pool is still much higher than before the collapse of Terra UST.

Rumors of USDC Collapse

Part of the rumor originated from Geralt Davidson, who has a following of just over 2,000 on Twitter. His allegations include:

  1. Paying interest rates to crypto banks like Silvergate to encourage USDC adoption.
  2. Involvement with high-risk lenders: Genesis, BlockFi, Celsius, and 3AC.

He emphasizes on point 1 that Circle has been in a perennial state of loss.

Circle: Strongest Financial Position in History

Circle founder Jeremy Allaire posted a series of statements on Twitter, emphasizing that due to past dark histories in the crypto space, he understands some users' paranoia, but Circle has consistently raised standards within its regulatory limits.

Since the Terra collapse, USDC has released numerous educational articles on asset transparency:

  • 5/13: How to Stay Stable - USDC Transparency and Trust
  • 5/26: Why Developers Can Trust USDC?
  • 6/3: How to Build Trust - USDC Audits and Attestations
  • 6/13: USDC Transparency and Trust - The Importance of Liquidity

Jeremy Allaire stated that USDC undergoes annual audits, releases additional reserve proof monthly, continues to collaborate with regulators, insurers, and top financial institutions, and is currently in its strongest financial position in history, with plans to further enhance transparency in the future.

USDT Decreases Commercial Paper Holdings Again

Issuer Tether announced on 7/1 that it has been continuously reducing its commercial paper holdings since releasing reserve proof on 5/19, currently holding $8.4 billion in commercial paper, with $5 billion set to expire on 7/31, and reiterating its commitment to zeroing out commercial paper holdings.

In unfavorable news for USDT, anonymous reports of institutions shorting USDT have surfaced, with Wall Street Journal at the end of June and Bloomberg on 7/4 reporting on it again.

In terms of data, USDT's initial share in the Curve 3pool was only 29.9%. After the Terra collapse, the USDT share briefly surged to 82% and currently stands at 64.7%, although still significantly higher than pre-Terra collapse levels.

Note: Based on AMM characteristics, in situations where users panic sell USDT, the USDT share in liquidity pools increases, prices drop, leading to a decoupling.