USDC Shifted Over 90% of Reserves Into Repos After SVB Failure, Moving Cash to GSIBs
Updated
Updated · Liberty Street Economics - · Jul 31
USDC Shifted Over 90% of Reserves Into Repos After SVB Failure, Moving Cash to GSIBs
1 articles · Updated · Liberty Street Economics - · Jul 31
Summary
USDC overhauled its reserves after Silicon Valley Bank’s 2023 collapse, cutting interest-rate exposure in its Circle Reserve Fund while redirecting bank cash toward global systemically important banks.
Repo holdings in the reserve fund jumped from zero to more than 90% of net assets after SVB failed and still stood at 69%; the fund’s weighted average maturity fell below the median Treasury-only money market fund.
By 2025’s fourth quarter, 77% of the fund’s repo book was in FICC-sponsored repos, showing a lasting shift in counterparty exposure rather than a temporary liquidity move.
Circle also moved direct deposits away from a mix of GSIBs and non-GSIBs such as SVB and Signature; by April 2023 it said more than 90% of cash was held at GSIBs.
The study says the changes shifted USDC’s risk away from duration and toward counterparty risk, underscoring how a major stablecoin is increasingly tied to traditional finance; dollar stablecoin market value has since risen 30% to about $308 billion.