- Circle maintained strong reserves to support USDC despite market volatility.
- USDC’s market cap continued to decline.
USDC currency [USDC] was the stablecoin that faced the most problems as Silicon Valley Bank (SVB) holdings collapsed. Despite the hurdles faced by USDC, Circle, the stablecoin’s issuer, continued to benefit from its growth.
From April 20 to April 27, Circle spent a total of $700 million in USDC, redeemed $1.1 billion in USDC, and reduced circulation by approximately $500 million. USDC has total assets of $30.5 billion and reserves of $30.7 billion, including $5.2 billion in cash and $25.5 billion…
— Wu Blockchain (@WuBlockchain) April 29, 2023
High on reserve, low on faith
Circle redeemed $1.1 billion in USDC in the past week, reducing circulation by about $500 million. Despite this, the stablecoin still had a high circulation of $30.5 billion with ample reserves of $30.7 billion at the time of writing, including $5.2 billion in cash and $25.5 billion in short-term US Treasury bonds.
USDC’s strong reserves, including a significant amount of short-dated US Treasury bonds, can also reassure users that their holdings are backed by reliable and safe assets.
Source: Circle
Despite showing evidence of reserves, USDC’s market cap continued to decline. USDT continued to erode the former’s market share as it went to press.
Source: Sentiment
USDC Caught in Legal Matters
However, new legislation could soon improve the condition of USDC and other stablecoins. Circle Chief Strategy Officer and Head of Global Policy, Dante Disparte, recently testified at a hearing entitled “Understanding Stablecoins’ Role in Payments and the Need for Legislation” held by the Subcommittee on Digital Assets, Financial Technology and Inclusion of the House Financial Services Committee.
Mr. Disparte emphasized that payment stablecoins like USDC can send a dollar-denominated form of electronic money, which is a critical innovation that could advance both US economic competitiveness and national security interests.
This innovation has the potential to change the way people send, spend, save and secure their money in digital form on any internet-connected device, subject to national regulatory frameworks taking effect. He also noted that a comprehensive payment stablecoin legislation enacted by Congress is needed to make this a reality.
If the US government takes swift action and provides more clarity on the stablecoin space, it could improve the condition of the market.
However, at the time of writing, interest in USDC continued to wane. New addresses also lost interest in the stablecoin. This was evidenced by the slowing network growth of the stablecoin over the past month.
Source: Sentiment
