In March the Intercontinental Exchange (ICE) announced a collaboration with Circle to explore using its USDC stablecoin and its recently acquired Hashnote USYC tokenized money market fund. One of the aims is to use them as collateral in its derivatives exchanges and clearing houses. ICE owns the New York Stock Exchange and operates several clearing houses around the world.
Chris Edmonds, the group’s President of Fixed Income and Data Services, recently discussed stablecoins and tokenized collateral with Smartbrief. Given the company’s interest in using stablecoins as collateral, he said that ICE had done some advocacy to influence the GENIUS and STABLE Act, so there wasn’t “a delta between the collateral we hold in the clearing houses and the collateral likely backing stablecoins.”
Edmonds highlighted potential risks with longer dated Treasury reserves, describing a scenario where a large stablecoin using ten year Treasuries might face forced liquidation of large volumes. Longer dated bonds have greater price volatility, a major contributor to the collapse of Silicon Valley Bank. The GENIUS Act stipulates that Treasury bills used as stablecoin reserves should be 93 days or less.
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