Circle, the consortium behind USDC, has released their audit for all assets through May 28th, 2021 conducted by Grant Thornton.  The audit took a different tack from the April audit and had a breakdown of how assets were denominated.  It is now clear that there is not a 1:1 USDC to US Dollar ratio as past audits had implied.  Grant Thornton took a page out of Moore Cayman's book and denominated some of the assets backing USDC as "Commercial Paper".

Enlarged Small Text For Mobile Readers

1 Cash includes deposits at banks and Government Obligation Money Market Funds. Cash Equivalents are defined as securities with an original maturity less than or equal to 90 days in accordance with generally accepted accounting principles (US GAAP).

2 USD denominated Certificates of Deposit issued in the US by branch(es) of Foreign Banking Organizations. Minimum S&P rating of S/T A1; maximum maturity of 13 months.

3 Maximum maturity of 3 years.

4 Unsecured debt obligations of corporations and financial institutions with original maturities between 91 days and 13 months. Minimum S&P rating of S/T A1; maximum maturity of 13 months.

5 Unsecured debt obligations of corporations and financial institutions with a remaining maturity of less than or equal to 3 years. Minimum S&P rating of BBB+; maximum maturity of 3 years.

6 Overall portfolio maintains an average credit rating of A or better on S&P scale and weighted average maturity of less than or equal to 1.5 years.

When it came to light that USDT had taken to commercial paper as large portion of it's reserves it rocked the crypto world and got the attention of regulators and Fed policy makers like Janet Yellen and Jerome Powell.  It will be interesting to see how this breakdown evolves over the coming months, currently leaving $4.5 billion unaccounted for (so far) in the USDC ecosystem.  It doesn't help that the NJ AG is investigating Blockfi for alleged securities violations leaving many exiting their positions from the platform which paid 8.6% on stablecoins.