Hacker News Reader

Comment by makomk | Hacker News Reader

USDC isn't backed by actual USD in a bank account somewhere either. (Largely because you can't just stick that much money in a bank account, and it wouldn't actually be close to 100% safe even if you could.)

View on HN

What? They literally hold 1:1 collateral in USD custody accounts.

Don’t they hold things like treasury bills which are practically equivalent to USD?

Coindesk has a breakdown [1]. Treasury bills make up 2.94% of their cash/cash equivalent balances, which in turn make up 75.85% of their balance sheet. It's mostly in commercial paper. As the Coindesk article points out, it's hard to say what the credit rating or liquidity of the commercial paper is.

Compare to the capital ratios of your average bank, though.

[1] https://www.coindesk.com/tether-first-reserve-composition-re...

This mini-thread is about USDC.

From what I can tell, unlike Tether USDC haven't publicly disclosed what proportion of their reserves are backed by treasury bills and what proportion are stuff like commercial paper - just that they're backed with a mixture of both. On the other hand, they do claim that everything backing their token has very good credit ratings and I don't think Tether do.

Bank customers money are backed (up to 250k for each account) by the US treasury though which is a pretty significant difference. The US can print itself out of any bank run, at least in the short term.

Reply on news.ycombinator.com