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Circle Allows ‘Free’ Early Withdrawal from USDC on Fixed Yield

By on July 7, 2022 0

Circle CEO Jeremy Allaire says Circle Yield users can withdraw their money sooner without incurring penalties as cryptocurrency markets see their worst performance in years.

Users of the cash product lend Circle their USDC for a fixed period of up to 12 months for a fixed return. But while a slew of crypto industry lenders have suspended withdrawals due to credit issues, Circle is looking to turn the tide.

In a blog post On Wednesday, Allaire said the measure is intended to provide relief to customers who are concerned about “any exposure to these [digital asset] markets in this turbulent time.

“Therefore, we are offering all Yield clients with active loans the option to withdraw their USDC from Yield, early, without penalty.”

Institutional clients lend USDC to Circle

Circle Yield is a regulated crypto yield and cash solution that only targets institutional investors – corporations and corporate treasury managers. Customers can lend Circle their USDC for a fixed period of between one and 12 months, for a fixed interest rate.

The company, in turn, lends this money to corporate borrowers “for the same fixed term for a fixed cost”. The Bermuda-registered lending unit has done about $248 million in business since its “official launch” in February, according to the CEO.

Allaire said Circle Yield is “over-collateralized with a 125% security interest in bitcoin (BTC) held by a third-party collateral agent.” Basically, this means that the platform has enough money in its reserves to pay interest plus principal to users who lend to it, even if the borrowers default.

“As borrowing demand has fallen alongside the turmoil in digital asset markets, our rates for new loans have followed suit,” he revealed. “All margin calls from borrowers were met on time and…neither Circle nor our clients suffered any loss.”

According to some observers, there has been speculation that the company may have lost around $500 million in operations – fees were paid to lenders Silvergate and Signature for housing Circle money. But Allaire dismissed the concerns as unfounded.

Circle Yield is “entirely separate” from the USDC stablecoin pool, a pool of around $56 billion, itself the subject of much speculation recently.

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