BSV is literally named "Vanguard Short-Term Bond ETF".
That being said, the only "standardized" terms I'm aware of are Bills (less than 1 year), bonds (greater than 10 years), and Notes (1 to 10 years).
In any case, it is clear that BSV is considered short-term by Vanguard and its investors. So I'm more than willing to believe in Vanguard's language over yours.
My point is that your 10% figure is not applicable to the treasuries Circle claims to hold. You can call them whatever you want.
What do you think will happen to the value of all those treasuries? Even short term ones will decline in value. Not only because of the actual rate increase, but also over the expectation of future rate increases to clamp down on inflation.
10% drop? Probably not. But any drop in price followed by a bankrun would end up in insolvency.
I know that even a portfolio consisting of nearly exclusively treasuries can still decline in value. That's all I'm saying. Banks, even with their high quality debt instruments, aren't immune to the effects of a bank run.
The value of those short term notes still climbs up and down daily on the market. With a big enough decline, issues can arise.