Circle’s stablecoin USDC lost its peg over the weekend after two of its banking partners, SVB and Signature, collapsed. However, it then recovered following a relevant Fed announcement.
USDC fell as low as $0.87 over the weekend after the company confirmed that $3.3 billion was stuck at SVB, which closed on March 10. Circle also has an undisclosed amount that was absorbed in the recent voluntary liquidation of Silvergate Bank. The third banking partner, Signature Bank, was also closed by state regulators on March 13 due to the need “to protect depositors.”
Related: Silvergate stock plunges
A Circle spokesperson told CoinDesk that the company doesn’t hold USDC reserves at Signature Bank. However, the sudden collapse of Signature has led to uncertainty for a crucial component of the cryptocurrency industry’s infrastructure: Signet, a real-time payment system based on blockchain technology that is supposed to work 24/7. It has been used by well-known crypto companies such as Circle and Coinbase.
After the Fed announced a $25 billion funding program to support and protect banks and other deposit-taking institutions following several bank failures in the U.S., Jeremy Allaire, CEO of Circle, posted on Twitter:
Regarding the $3.3 billion stuck at the SVB, the Fed confirmed Jeremy Allaire’s words about regaining access to funds on Monday with a statement:
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.
Allaire then added:
100% of USDC reserves are also safe and secure, and we will complete our transfer for remaining SVB cash to BNY Mellon. As previously shared, liquidity operations for USDC will resume at banking open tomorrow morning.
At the time of writing, the USDC price has recovered, rising 4.74% in the last 24 hours. According to CoinMarketCap data, it’s now trading at $0.99.
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