The real reason Circle de-risked its USDC reserves?

“Back in 2020-21, Circle was investing USDC’s reserves in all sorts of riskier assets. Then it shifted to a 100% Treasury bill policy. Why? Circle feared being classified as an ‘investment company’ as defined in the Investment Company Act of 1940.” (HT @jp_koning) [Read more below and on page 70 here]Stablecoins, meet 3% interest rates

“The global rise in interest rates is finally beginning to percolate into the stablecoin sector. One of the effects of this rise is that centralized stablecoins, which by default pay 0% to holders, are introducing backdoor routes for paying interest to large customers. While large stablecoin holders may be benefiting from this trend, small holders of stablecoins are being ignored. Small stablecoin holders need to unite. By working together through a StablecoinDAO, their bargaining power vis-a-vis the big stablecoin issuers improves. They may be able to negotiate the same interest payments that large stablecoin customers are getting.” [Read more at JK Koning’s Moneyness]

Central bank digital currencies: An active role for commercial banks

McKinsey & Company published a report that pitches active commercial bank involvement in central bank digital currency (CBDC) decision-making processes. But more interestingly for me, the report advocates central banks taking a more “agile” approach to CBDC research and development. “By adopting an agile approach, central banks can deploy a CBDC within three years, compared with five years or more using a traditional waterfall development model (see first infographic below). Although adoption and realization of scale will likely prove to be longer-term efforts, lessons from early launches and a set of best practices (second infographic) can help foster early market acceptance. [Read more at McKinsey & Company]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.