How does it work

Underlying Assets

Investment Guidelines

The composition and management of the portfolio will strictly adhere to the following guidelines:

  • Capital Preservation: Prioritise the preservation of the capital backing XUSD to maintain a stable value against the pegged currency or asset.
  • Liquidity Management: Maintain sufficient liquidity to meet redemption demands and ensure the stablecoin's ability to be exchanged at its pegged value.
  • Diversification: Diversify investments across a range of low-risk and highly liquid assets to mitigate concentration risk.
  • Risk Management: Conduct regular risk assessments to identify and manage potential risks associated with market volatility, credit, liquidity, and other relevant factors. Derivatives may be used for financial risk management purposes as necessary.
  • Regulatory Compliance: Adhere to all relevant regulatory requirements and guidelines governing the management of assets backing stablecoins.
  • Transparency: Provide transparent and timely information to stakeholders regarding the investment portfolio, performance, and any material changes that may impact the stability of XUSD.
  • Yield Optimization: Seek opportunities to generate a reasonable yield on the assets backing the stablecoin while maintaining a conservative risk profile.
  • Bankruptcy-remote: assets will be held for the benefit of XUSD holders with regulated financial institutions in bankruptcy-remote accounts, segregated from Excellar's operating accounts.

Investment Mandate

The primary investment objective is to safeguard the value and stability of XUSD while optimising returns within acceptable risk parameters. To achieve this objective, the portfolio will adhere to the following mandate which specifically identifies eligible asset types, stipulations, and limits.

Phase One

InstrumentCredit RatingMax WAM
Vanguard Treasury Money Market Fund
Open-ended government money market fund
AAA/AA+< 60 days
Dreyfus Insured Deposits
Insured bank deposits
AAACash

Phase Two

  • Max Weighted Average Maturity: 6 months.
  • Credit Rating: the portfolio should only invest in AAA-rated securities and achieve close to AAA rating based on the stipulations for each instrument below.
InstrumentDiversification LimitIssuer Limit
US Treasury Securities
Held in cash-custody accounts and cannot be rehypothecated
100%100%
US Agency Securities
Held in cash-custody accounts and cannot be rehypothecated
20%10%
Repurchase/Reverse Repurchase Agreements
Backed by US Treasuries, with appropriate haircuts
100%100%
Repurchase/Reverse Repurchase Agreements
Backed by US Agencies, with appropriate haircuts
30%10%
Bank Demand Deposit Accounts
Must be designated as a Global Systemically Important Bank
10%10%
Index-tracking securities such as ETFs and Money Market Funds
Must keep at least 99% of assets in cash and US Government obligations
40%20%
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