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Centre, the issuer of popular stablecoin USDC, has revealed that it will convert the asset reserves back to cash and U.S. treasury bills only.
In an official blog post on Monday, the Centre Consortium noted that it now intends to “hold the USDC reserve entirely in cash and short duration US Treasuries.”
The organization said the decision was prompted by its commitment to increasing transparency and exploring new opportunities to collaborate with the USDC community. It noted that the new changes will be promptly implemented and “will be reflected in future attestations” by its auditing firm, Grant Thornton.
Centre Makes U-turn
Recall that last month, the company revealed in an attestation report for May published by Grant Thornton that it has expanded its investment portfolio for the USDC reserves, worth about $22.2 billion at that time.
Grant Thornton gave a well-detailed breakdown of the expansion in the paper. The auditing firm noted that Centre held $13.4 billion (61%) of USDC reserves in cash and cash equivalents and $2.7 billion (12%) in U.S. Treasuries.
In addition to this, the stablecoin issuer expanded the reserves portfolio to include $2.9 billion (13%) Yankee Certificate of Deposit, $2 billion (9%) Commercial Paper, $1.1 billion (5%) Corporate Bonds, and $100 million (0.1%) Municipal Bonds & US Agencies.
Coinbase Refutes USDC Reserve Claim
Meanwhile, earlier this month, Coinbase, one of the official backers of the USDC stablecoin, walked back on its previous claims that the stablecoin was backed by the US dollar, refuting its initial claim.
Coinbase had even gone as far as changing the description for USDC on its official website from “backed by one US dollar,” “held in a bank account,” to “backed by one dollar or asset with equivalent fair value.”
The expansion of the reserve portfolio to contain those other assets did not sit well with USDC users and partners. The reason being that those assets could suffer massive losses. And since they are less liquid than cash, it could cause a lot of trouble if users ever tried to redeem the stablecoin en masse.
The conversion of the USDC reserves back to cash and U.S. Treasuries will take effect immediately and “will not extend past September,” according to a tweet from Coinbase’s COO, Emily Choi.