According to a new report from CCData, the stablecoin industry needs to survive a significant loss in interest income following the Federal Reserve’s latest interest rate cut.
In its latest report on stablecoins and central bank digital currencies (CBDCs), the digital asset data and index provider reveals that the majority of the reserves of the top five stablecoin issuers are in U.S. Treasury bills. They point out that interest rates are an important aspect of their business. model.
With interest rates lower and Treasury bill yields lower, the company estimates there will be approximately $632 million in losses for major stablecoin issuers.
“The top five centralized stablecoins collectively hold close to $125 billion in U.S. Treasury bills, accounting for nearly 80.2% of their reserves, and the recent interest rate cut, the first since March 2020, The Federal Reserve’s decision would result in a loss of $625 million.”Each 50 basis points (basis points) reduction would result in a loss of annual interest income.
According to its latest certification report, Tether holds nearly $93.2 billion in U.S. Treasuries and repurchase contracts, which contributed the bulk of its $5.2 billion net profit in the first half of 2024. USDC, the second largest stablecoin, holds $28.7 billion worth of US Treasuries through their trades. The Circle Reserve Fund holds U.S. Treasury assets worth $1.83 billion, $634 million, and $502 million in FDUSD, PYUSD, and TUSD, respectively. ”
Source: CCData
Tether (USDT), a leading stablecoin issuer, has invested over $112 million in an agro-industrial company founded in Argentina, in an apparent move to diversify its investments. In the fourth quarter of 2023, much of Tether’s record profits came from the yields on its U.S. government bond holdings.
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