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John Paul Koning Profile picture
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Jan 8 • 3 tweets • 2 min read
Circle's most recent attestation report shows 30% of USDC's reserves – or $12.79 billion – are invested in its government money market fund, the Circle Reserve Fund, managed by BlackRock. This is up from 0% in October.

centre.io/hubfs/USDC%202…
Since then the proportion of USDC reserves invested in the Circle Reserve Fund have risen to around $28.6 billion, or 65%. I get this from BlackRock's disclosure page, which is updated daily: blackrock.com/cash/en-us/pro…
This seems like a win for USDC users. Circle is yielding some of its control over USDC's reserves to an external manager subject to SEC regulation, which ultimately makes USDC safer. Transparency improves too, since USDC users can now get regular updates from BlackRock.

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More from @jp_koning

John Paul Koning Profile picture
Aug 14, 2021
The 2020 collapse in interest rates really savaged stablecoin revenue.

There were $11 billion USDC stablecoins in March 2021, up an incredible 16x from $600 million in 2020. But USDC's quarterly interest income didn't jump by 16x. It went from $1.3m to $3.2m, a measly double.
Source is Circle's S-4: sec.gov/Archives/edgar…
At the time I wrote about how the rate collapse would damage stablecoins: coindesk.com/zero-interest-… I thought they might introduce a small universal transaction fee. Or add-on services. Circle, USDC's issuer, chose the latter with its Transaction & Treasury Services business line.
Read 4 tweets
John Paul Koning Profile picture
Jul 7, 2021
I wrote about the transparency of second-largest stablecoin USD Coin, focusing on the nature of its "approved investments." What are these investments? How many does it own? Circle, USDC's issuer, has never disclosed much information on them.

coindesk.com/circle-is-not-… @CoinDesk
Because Circle is regulated by 44 state licensing boards, and each board has its own permissible investment rules (some very lenient), it's very difficult to reverse-engineer what USDC's "approved investments" might be comprised of.
Responding to an inquiry, Circle said that they own "cash, cash equivalents and short-duration investment-grade assets."

This gives us a bit more of an idea about the nature of Circle's approved investments.
Read 4 tweets
John Paul Koning Profile picture
Oct 20, 2019
Nick has an interesting theory about why banknotes replaced coins. Technology made coin counterfeiting easier, he says, so people fled into banknotes. Otherwise they would have stuck with coins.

But it's wrong. 1/4
Government policies—not innovations in counterfeiting—explain the prevalence of fakes. In the UK the Royal Mint refused to coin copper, so the supply of change was worn-out & easily counterfeited. It didn't hire foreigners or adopt new technology, so its work was shoddy. 2/4
Once it was adopted, technology cut down on fakes by providing mints with a new set of defences:

-patterned edges
-elaborate engravings
-crucible steel
-striking in collar
-steam striking
-high reliefs
-die hubbing

I get this from @GeorgeSelgin's excellent book, Good Money 3/4
Read 4 tweets

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