Circle (USDC) Announces External Capital To Cover Silicon Valley Bank Shortfall

Silicon Valley Bank’s shutdown and the revelation of Circle’s $3.3 billion cash reserves in the bank have raised concerns in the cryptocurrency market. The event caused the USDC stablecoin to lose its peg, falling to $0.8774 before recovering to its current price of $0.9796. Major cryptocurrency exchanges like Coinbase, Binance, and Robinhood took necessary measures to address the situation.

 

Full Collateralization Amidst SVB Shutdown

To provide more information and transparency, stablecoin issuer Circle announced an update on the USDC and Silicon Valley Bank situation. It reiterated that the USDC is 100% collateralized with a combination of U.S. Treasuries and cash, ensuring that investors need not worry about their investment.

Circle stated that USDC liquidity operations would resume as usual when banks reopen in the United States on Monday morning. It also confirmed that $3.3 billion of USDC’s cash reserves are still with SVB, but the company had initiated the transfers of these funds to various other banking partners. However, the transfers have not yet been settled, and the company remains confident about the situation.

 

Concerns Over USDC Stability

Circle also assured investors that in case SVB does not return 100% of the funds, they will cover any shortfall using corporate sources involving external capital. It further confirmed that USDC has zero exposure to Silvergate, assuaging concerns about the stablecoin issuer’s exposure to other banks.

The announcement from Circle aimed to address concerns about the USDC’s stability and the potential impact of Silicon Valley Bank’s shutdown on the broader cryptocurrency ecosystem. With the future of SVB still uncertain, the cryptocurrency market is closely monitoring how Circle and USDC will weather the storm.

The crypto market is no stranger to volatility, and stablecoins like USDC play a crucial role in providing stability and liquidity. As a result, it is essential to have transparency and open communication from stablecoin issuers like Circle to ensure that investors can make informed decisions.