Leading stablecoin issuer Tether, the firm behind the USDT token, has amassed $2.5 billion in excess reserves, and revealed it now plans to use 15% of its realized net operating profits to invest in the flagship cryptocurrency Bitcoin.

The issuer behind the popular USDC stablecoin, Circle, has started undertaking significant rebalancing of its reserves in a bid to protect them against a potential default on U.S. government debt.

The Dogecoin blockchain has reached a peak of 719,000 daily transactions, largely attributed to its newly established DRC-20 token standard that facilitates the creation of meme coins on the Dogecoin network.

Top stories in the Crypto Roundup today:

• Tether Commits to Buying Bitcoin Using 15% of Net Realized Profits
• Circle Shifts USDC Reserves to Repo Agreements Amid Debt Ceiling Crisis
• Dogecoin Transactions Skyrocket with New DRC-20 Token Standard

Tether Commits to Buying Bitcoin Using 15% of Net Realized Profits

Leading stablecoin issuer Tether, the firm behind the USDT token, has amassed $2.5 billion in excess reserves, and revealed it now plans to use 15% of its realized net operating profits to invest in the flagship cryptocurrency Bitcoin.

Tether has said it has more than enough reserves to back up its stablecoins, with USDT alone having $82.84 billion of tokens in circulation. Each token is pegged to the value of one U.S. dollar and is supported by cash or short-term assets in Tether’s reserves.

The company earns income from its large portfolio of U.S. Treasury bills, gold and other investments. Tether’s CEO, Paolo Ardoino, said that keeping these extra reserves shows the company’s dedication to making its stablecoin product strong and reliable.

Unlike traditional banks, which operate on a fractional reserve basis, Tether maintains its cryptocurrencies backed by mostly cash and short-term U.S. Treasury bills. At the time of writing, 1-month U.S. Treasurys are yielding around 5.59%.

From the latest attestation dated March 31, 2023, Tether revealed that it held about 2% of its portfolio in Bitcoin. It’s now set to use 15% of its monthly net operating profits, which come from realized gains from its T-bills and similar investments, to buy BTC.

Currently, the total value of Bitcoin in Tether’s portfolio is well below its own excess reserves, amounting to approximately $1.5 billion versus $2.5 billion.

Circle Shifts USDC Reserves to Repo Agreements Amid Debt Ceiling Crisis

The issuer behind the popular USDC stablecoin, Circle, has started undertaking significant rebalancing of its reserves in a bid to protect them against a potential default on U.S. government debt.

As revealed on its website, the Circle Reserve Fund, under the guidance of the global investment powerhouse, BlackRock, has injected $8.7 billion in overnight repurchase agreements, or repos, into its portfolio as of May 16.

Its so-called tri-party repo agreements rope in banking titans such as BNP Paribas, Barclays, Goldman Sachs, and the Royal Bank of Canada. Overnight repo agreements serve as short-term collateralized loans.

These repo agreements essentially see a borrow - in this instance dealing with U.S. Treasurys – sell a security for immediate cash and agree to repurchase the collateral the following day at a marginally higher price. The difference in price is an implicit overnight interest rate.

The agreement allows deep-pocketed institutional investors to allocate their surplus cash to Wall Street dealers seeking funds. According to a Circle spokesperson, it “provides additional protection fo the USDC reserve in the unlikely event of a U.S. debt default.”

The decision is in response to the ongoing standoff in Washington, as U.S. lawmakers engage in intense discussions with the Biden administration concerning an increase in the nation's debt ceiling – the government's legal borrowing limit.

According to Treasury Secretary Janet Yellen, the Treasury Department may exhaust its cash reserves by early June, unless there's an upward adjustment of the debt ceiling.

Dogecoin Transactions Skyrocket with New DRC-20 Token Standard

The Dogecoin blockchain has reached a peak of 719,000 daily transactions, largely attributed to its newly established DRC-20 token standard that facilitates the creation of meme coins on the Dogecoin network.

In a notable surge, this daily transaction figure even outstripped Bitcoin's record, which logged 566,000 transactions the previous day. This surge in transactions is coming after Dogecoin enthusiasts have introduced their distinct "Doginals" tokens, which resemble non-fungible tokens (NFTs).

The DRC-20 standard, akin to Bitcoin's BRC-20, enables the incorporation of arbitrary and non-financial data into blocks. Dogecoin users have enthusiastically embarked on encoding tokens into "shibes," the smallest units of Dogecoin, tracing them across the network.

Typically, Dogecoin daily transactions maintain a stable rate of approximately 20,000 per day. However, data indicates that over the past week, they have soared and fluctuated significantly. The first notable rise occurred on May 10th when transactions surpassed 450,000 just a day after the DRC-20 standard was introduced.

State of the Crypto by Top Tier Exchange Volume

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