USDC Issuer Circle Reallocates $8.7B to Repo Agreements Amidst Potention U.S. Default Risk

Stablecoin issuer Circle is adjusting the reserves backing its $30 billion USD Coin ($USDC) in anticipation of a potential U.S. government default on its debt.

The Circle Reserve Fund, overseen by investment management firm BlackRock, added $8.7 billion in overnight repurchase (repo) agreements to its portfolio on May 16. These tri-party repo agreements incorporate banks such as BNP Paribas, Goldman Sachs, Barclays, and Royal Bank of Canada.

This move is in response to ongoing negotiations between U.S. lawmakers and President Biden's administration over increasing the nation's capacity to issue new debt, commonly referred to as the debt ceiling. Treasury Secretary Janet Yellen has warned that the Treasury Department will run out of money by early June if the debt limit is not raised.