- This highly liquid position serves to protect reserves
- The deal involves major banks, including Goldman Sachs
Circle has once again rebalanced its USDC token collateral. The Black Rock Fund, which manages the asset’s reserves, entered into several repo transactions totaling about $8.7 billion.
REPO is a transaction for the purchase/sale of a derivative with the obligation to repurchase the asset in the shortest possible time at a slightly higher price. In fact, it is a tool for secured lending.
Such transactions are also called “overnight”. The borrower uses derivatives such as Treasury bonds as collateral. The next day he redeems them at a higher price.
For banks and other large counterparties, this is an easy and fast way to get a large amount of capital. For Circle, this is a kind of “protection” in case the US authorities default and fail to pay off their obligations.
Based on the BlackRock documentation, the repo deal involves such counterparties as BNP Paribas, Goldman Sachs, Barclays and Royal Bank of Canada:
Circle noted that the plan to add repurchase agreements to reserves has been underway over the past few months. But the company also did not deny the fact that this highly liquid position serves as a “protection tool” against an “unlikely” default.
Previously, the company completely liquidated a portfolio of bonds with a maturity of more than a month. So is a default scenario unlikely? And what should traders do? Well, following Kiyosaki’s advice, you should invest in gold and BTC, as well as buy a gun, for self-defense, of course.