Highlights:
The Bank Policy Institute, a bank-supported think tank, published a blog post raising concerns that a proportion of the USDC stablecoin reserves could be parked at the Federal Reserve, despite the stablecoin issuer not having a central bank account. If this were allowed, in times of uncertainty when there’s a flight to quality, this could result in bank runs diverting cash into the USDC stablecoin, which might be perceived as being as good as a central bank digital currency (CBDC).
Since November, BlackRock has been managing a large portion of the reserve assets of the USDC stablecoin on behalf of the stablecoin issuer, Circle. BlackRock created a bespoke money market fund, the Circle Reserve Fund, which invests in U.S. short-dated Treasuries. It currently manages around two thirds of the assets of the $44 billion stablecoin, which keeps 80% of its reserves in Treasuries.
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