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Comment by peanut-walrus | Hacker News Reader

Hold on...Circle was just keeping $3.3B in regular deposits? Am I understanding this correctly? I'm not a treasury expert but this seems...insane?

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You have to have liquid dollars in inventory to manage USD redemptions. Banks have to keep 10% of deposits on reserve at the Fed, so $3.3 billion in cash out of $40 billion is actually on the low side.

The fed recently reduced reserve requirements to zero, so banks need exactly zero cash on hand to fund withdrawals shockingly

And circle had ~$10B is cash at banks for redemptions, $3.3B of which in SVB

Gonna need proof. Doesn’t sound like something the Democrats would do.

https://www.federalreserve.gov/monetarypolicy/reservereq.htm

but not really too much. t-bills settle t1. i.e. you can get all your money into cash in 24 hours.

Putting everything into US treasury bonds is what sank SVB, so putting everything into AAA rated bonds isn't safe either.

SVB bought long duration bonds, they could not wait until maturity to get the money back. Keep rolling short duration bonds would be less risky.

The interest rate risk of a 10y t-note is a couple orders of magnitude higher than the interest rate risk of a 1 month t-bill, because of duration.

USDC would have to wait just over a month for all of their t-bills to mature, SVB was looking at waiting 8 years.

Massively different risk profiles.

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