Circle CEO Jeremy Allaire has said users of Circle Yield can withdraw their money early without facing penalties as cryptocurrency markets see their worst performance in years.
Users of the treasury product lend Circle their USDC for a fixed period of up to 12 months for a fixed return. But as a slew of lenders in the crypto industry suspended withdrawals because of solvency problems, Circle is looking to buck the trend.
In a blog post on Wednesday, Allaire said that the measure is meant to provide relief to customers who have concerns with “any exposure to these [digital asset] markets during this time of turmoil.”
“Hence, we are offering all Yield customers with active loans the opportunity to withdraw their USDC from Yield, early, without penalty.”
Institutional clients lend USDC to Circle
Circle Yield is a regulated crypto yield and treasury solution that targets institutional investors only – enterprises and corporate treasury leaders. Customers can lend Circle their USDC for a fixed period of between one and 12 months, for a fixed rate of interest.
In turn, the company loans out that money to corporate borrowers “for the same fixed term for a fixed cost.” The Bermuda-registered lending unit has clocked about $248 million of business since its “official launch” in February, according to the CEO.
Allaire said Circle Yield is “overcollateralized with security interest in 125% bitcoin (BTC) held at a third-party collateral agent.” Basically that means the platform has enough money in its reserves to pay interest plus principal to users who lend to it, even if borrowers defaulted.
“As borrowing demand has fallen along with the turmoil in digital asset markets, our rates for new loans have followed,” he revealed. “All borrower margin calls have been met on time and…neither Circle nor our customers have incurred any loss.”
There has been speculation the company lost around $500 million in operations – alleged to be fees paid to lenders Silvergate and Signature for housing Circle’s cash, according to some observers. But Allaire dismissed the concerns as unfounded.
Circle Yield is “entirely separate” from the USDC stablecoin reserve, a stash of about $56 billion, itself the subject of much speculation recently.