USD Coin (USDC), a stablecoin and the fifth-largest cryptocurrency in the world, fell to an all-time low on Saturday after it was revealed that Circle, the US-based company that operates the coin, had invested $ 3.3 billion of its reserves in the now collapsed Silicon Valley Bank (SVB).
USDC is a stablecoin, which means its price is tied to a reserve asset, and in this case, the US dollar. However, after the disclosure, the stablecoin broke out of its 1:1 dollar peg and fell as low as $0.87, before recovering to $0.90 by the end of the day.
According to a statement published by Circle, $3.3 billion of USDC's $40 billion reserves are held at the SVB.
"Following confirmation at the end of today that transfers initiated Thursday to clear balances had not yet been processed, $3.3bn of ~$40bn USDC reserves remain at SVB," the company said in a tweet. .
"Like other customers and depositors who have relied on SVB for banking services, Circle joins calls for the continuation of this major bank in the US economy and will follow guidance from state and federal regulators. ".
1/ Following confirmation late today that transfers initiated on Thursday to clear balances have not yet been processed, $3.3bn of the ~$40bn USDC reserves remain in SVB.
— Circle (@circle) March 11, 2023
Gavin Newsom, the governor of California, where SVB is based, released a statement afterwards saying he was in communication with the White House and monitoring the situation.
“Everyone is working with the FDIC [Federal Deposit Insurance Corporation] to stabilize the situation as quickly as possible, to protect jobs, people's livelihoods and the entire ecosystem of innovation that has served as a tent for our economy."
Notably, SVB collapsed on Friday, just 48 hours after the bank's announcement, leading not only to an aggressive drop in its shares that resulted in a market loss of more than $80 billion, but also triggering the panic among depositors and customers.
It was the biggest US bank failure since the 2008 financial crisis. The FDIC is now scrambling to find another bank over the weekend willing to merge with SVB and stop the impending total collapse.
(With agency contributions)
