According to a disclosure page published by BlackRock, Circle has invested 30% of its USD reserves in the US Treasury via Circle Reserve Fund, which is managed by BlackRock. The value of the fund invested comes to approximately $13 billion. The aim is to boost transparency amid the FTX collapse.
The fund has been invested in the government money market to resolve the primary concern of transparency. Considering that the stablecoin issuer handles a large amount of money to build big projects, this move was indeed required to provide assurance to investors and creditors that their funds are safe.
Moreover, another reason to invest in the US Treasury was to make sure that all the parties involved in the ecosystem of the stablecoin have the belief that they can withdraw their funds whenever they want.
With a value of nearly $12.79 billion, the fund is managed by BlackRock, a venture that has been with Circle since the establishment of USDC. The disclosure page specifies that the sole beneficiary of the investment is Circle. Interest generated from the deposit will serve as an advantage to Circle. It remains to be seen how and if the benefit will be passed on to the community.
FTX fell like a pack of cards, and so did the entire digital ecosystem of currencies. This prompted the majority of the platforms to provide assurances to their investors and creditors that everything is well handled from their side.
The development follows the announcement of setting up the Circle Reserve Fund that was made in November last year. If reports are to be believed, then the reserve will only see more funds being invested in it. The reserve was to be established from the maturing investments from new treasuries. More funds coming in looks obvious as the fund allocation is scheduled to mature in the first quarter of 2023.
Therefore, Circle can inject more funds into the reserve in the days to come. The figure back in October 2022 was 0%. An injection of 30% is a good jump.
The current reserve of the stablecoin is at $45 billion, 30% of which has already been invested in the government money market. BlackRock’s management appears to be rock solid since it has experience managing over $8 trillion in investor assets. Also, the fund manager has been with Circle since the beginning through an investment of 400 million into its operations.
An investment in the US Treasury is being done with the objective of strengthening transparency in the community. The Circle is not the only one taking a step in this direction. Other ventures are said to follow the trend. The majority of the centralized exchanges have now started publishing proof of reserves to assure the network of shareholders, investors, and creditors that it is safe to deposit and withdraw anytime.