Multinational Tax Advisory Firm, Grant Horton, conducted an audit under which 61% of USDC’s reserves were held in cash and cash equivalents to $13.4 billion. Jim Cramer has also questioned the transparency issue of the Tether reserves and asked for an explanation.
Grant Horton has conducted an audit under which it has come to light that 61% of USDC’s reserves were held in cash, cash equivalents, equating to $13.4 billion as of May 28. Auditors working for Circle have revealed the reserves backing the firm’s USDC stablecoin. On the other hand, Mad Money host Jim Cramer in his show has asked of Tether’s lack of transparency with its USDT reserves.
The total commercial paper by Circle accounts for 9% of its reserves. But the figures that have been provided in the audit depict a wide contrast to tether’s reserves. Under it, the undisclosed commercial papers accounted for 49.5% of its total reserves. This is what Cramer has been questioning too and sounded an alarm.
Highlights of the report
As per the Circle report, cash is defined as deposits at banks and government obligation Money Market Funds, whereas cash equivalents are called securities with an original maturity less than or equal to 90 days.
When the report was out, on May 28 there were a total of 22,176,182,251 USDC in circulation. It is the total fair value of Circle’s US dollars denominated assets. It was found in segregated accounts, which fully backed the supply of USDC.
Circle found out that the reserves were closed voluntarily as part of its transparency goals. The firm had revealed the plans of going public through a special purpose acquisition company (SPAC) this month.
The next biggest shares were of Yankee CDs and US treasure. They were the assets backing the reserves at 13% and 12% each. It has a combined value of $5.6 billion. Yankee CDs are defined as USD denominated certificates of deposit issued in the US by branches of Foreign Banking Organizations. The maximum maturity of the Yankee CDs is 13 months. Whereas the US treasuries have a maximum maturity period of three years.
High profile meets
The scrutiny on the stablecoin was on the rise from the U.S. government when the Circle’s reserve breakdown was published. Janet Yellen, the U.S. Treasury Secretary, had met with the other financial regulators to discuss the regulatory framework for the stablecoins.
Jeremy Allaire, CEO of Circle has admitted that the firm is committed to transparency of its operations and working within the traditional financial system.
Jim Cramer, who is also suspicious of Tether’s lack of transparency, has raised the concern and asked why the firm has not disclosed what the large percentage of commercial paper backing USDT is. Tether on May 13 has released a brief breakdown, but did not mention any independent review conducted on behalf of the firm.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.