From September this year, USDC stablecoin will be 100% backed by cash and short-term US government treasuries. This is according to the Centre Consortium, the organization that manages the cryptocurrency, which is backed by Circle Financial And Coinbase.

According to Circle, the USDC has always been fully backed by reserves equal to the USDC in circulation, giving users the ability to always redeem 1 USD Coin for $1.00. However, changes in the investment portfolio for USDC reserves began in May this year.

Circle revealed that its stablecoin was only 61% backed by cash and cash equivalents. This was disclosed in a report published in July. According to the attestation report where Centre's auditing entity GrantThornton broke down the investment portfolio, the USDC's reserves were diversified broadly.

In addition to cash and US treasury bills, the firm included Yankee Certificate of Deposit (13%), Commercial Paper (9%), Corporate Bonds (5%), and Municipal Bonds & US Agencies (0.2%).

In a tweet, the Coinbase Chief Operations Officer, Emilie Choi said that the US exchange could have updated its website to reflect this when the changes were first made.

“When Circle shared their May report about USDC reserves in late July (which included a more diversified pool of investments for the first time) we should have moved faster to update statements like that on our website.”

She said that was a mistake on Coinbase’s part and it takes ownership for that. Choi also added that the changes in the investment portfolio would not extend past September.

The Coinbase COO noted that Centre and Circle will ensure that the USDC investments revert to a more conservative investment profile by the end of September. These updates would be reflected in future attestation reports (June and July) conducted by auditors Grant Thornton.

Circle’s stablecoin currently commands a market cap of nearly $28billion, making it the world's second-largest stablecoin. The largest stablecoin remains Tether’s USDT, with a market cap of more than $65 billion.

There have been increasing calls for stablecoin issuers to provide frequent breakdowns of their reserve compositions to address ambiguity in the fast-growing crypto industry.

Tether has drawn scrutiny from regulators in the past about whether or not its assets are truly backed by the expected fiat currency. This has led to Tether releasing reports on its reserves.

The stablecoin started doing so after a two-year case with the New York Attorney General (NYAG). The NYAG had alleged that Tether misrepresented the degree to which USDT was backed by the greenback.

NYAG then demanded that Tether release periodic reports indicating how the stablecoin is backed and what its reserve looks like. Tether was also asked to pay up to $18.5 million as part of a settlement and was barred from operating in New York.

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