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Grant Horton has audited USDC’s reserves, while Jim Cramer has raised concerns about Tether’s commercial paper reserves.
Circle’s reserves backing its USDC stablecoin have been revealed by auditors, while Mad Money’s Jim Cramer has questioned Tether’s lack of transparency regarding its USDT reserves.
Multi-national tax advisory firm Grant Horton conducted the audit, and a reserve attestation report was published on July 20 which showed that 61% of USDC’s reserves were held in cash and cash equivalents equating to $13.4 billion, as of May 28.
Circle’s total commercial paper accounts for 9% of its reserves, a dramatic contrast to Tether’s holdings, which have secret commercial paper accounting for 49.5 percent of total reserves – something Cramer has recently been “raising the alarm” about.
Cash is defined as deposits at banks and Government Obligation Money Market Funds, while cash equivalents are securities having an original maturity of less than or equal to 90 days, according to the Circle study.
According to the report, there were 22,176,182,251 total USDC in circulation on May 28, with the whole fair value of Circle’s USD-denominated assets kept in segregated accounts completely backing the supply of USDC.
Circle stated that it voluntarily released its reserves as part of its transparency ambitions, with the company previously announcing plans to go public via a special purpose acquisition company (SPAC).
With a combined total value of $5.6 billion, ‘Yankee CDs’ and US Treasures accounted for the next largest percentage of assets backing the reserves, at 13 percent and 12 percent, respectively.
Yankee CDs are “USD denominated Certificates of Deposit issued in the United States by branch(es) of Foreign Banking Organizations,” with a maximum maturity of 13 months, compared to three years for US Treasury bonds.
Commercial paper accounts for 9% of total allocations worth $2 billion, corporate bonds account for 5% of total allocations worth $1.1 billion, and municipal bonds and U.S. agencies contribute for 0.2 percent of total allocations worth $100 million.
The release of Circle’s USDC reserve breakdown comes as the US government intensifies its examination of the stablecoin sector, with US Treasury Secretary Janet Yellen meeting with other financial authorities this week to propose a regulatory framework for stablecoins.
As I shared just over a week ago, we are expanding our transparency on USDC Reserves. You can find the expanded table of reserves assets in our May attestation report: https://t.co/dYCFnnxG82
— Jeremy Allaire (@jerallaire) July 20, 2021
Circle CEO Jeremy Allaire emphasized in a July 20 blog post that the firm is committed to providing transparency of its operations and working within the traditional financial system:
“Core economic activities underpinning USDC are built inside the perimeter of the U.S. financial system, and not outside of it.”
Jim Cramer thinks Tether is Mad Money
Jim Cramer, head of CNBC’s Mad Money, questioned Tether’s lack of transparency in a July 20 interview with The Street, wondering why the company hasn’t disclosed the huge percentage of commercial paper underpinning USDT.
On May 13, Tether provided a brief reserve breakdown, but made no mention of any independent review done on its behalf.
According to Tether’s reserve breakdown, three-quarters of its reserves were held in cash, cash equivalents, other short-term deposits, and commercial paper as of March 31. Commercial paper made for 65.39 percent of that category, while cash accounted for only 3.87 percent.
Cramer has been sounding the alarm bells about the firm’s commercial paper holdings, which it has yet to reveal:
“I am concerned about Tether, and I’m not gonna stop sounding the alarm until I know what Tether has. They’ve got about $60 billion in commercial paper. Tether open up the kimono, what commercial paper do you own?”
“Why wouldn’t they tell us?” he added, as he questioned whether the SEC will step in to find out.
“There’s a belief that a lot of the commercial bank paper, is Chinese bank paper, why not put that to rest and tell us it isn’t?” he said.