- Circle recently announced that it uses Silicon Valley Bank (SVB) to manage almost 25% of USDC reserves held in cash.
- After the Circle’s announcement, USDC started depegging, with USDC falling by nearly 9% in the last 24 hours,.
Circle recently shared that after SVB collapsed, its USDC stablecoin depegs on $3.3 billion SVB exposure. On March 11th, Circle a crypto firm— announced that “Silicon Valley Bank is one of six banking partners Circle uses for managing the ~25% portion of USDC reserves held in cash. While we await clarity on how the FDIC receivership of SVB will impact its depositors, Circle & USDC continue to operate normally.”
USDC is a stablecoin pegged to the US dollar on a 1:1 basis. At press time, USD Coin price is $0.910900 with a 24-hour trading volume of $22.29 billion. USD Coin is down 8.90% in the last 24 hours, with a current market cap of $37.28. It has a circulating supply of 40.92 billion USDC coins.
Circle’s Latest Attestation
Along with the tweet, Circle also shared its examination report for January 2023. According to the report, they have “examined the management of Circle Internet Financial LLC’s assertion that the Fair Value of Assets Held in USD Coin (“USDC”) Reserve is equal to or greater than USDC In Circulation following the criteria defined in the accompanying USDC Reserve Report as of January 17, 2023, and January 31, 2023, at 11:59pm.” However, Circle’s management is responsible for its assertion.
As CoinDesk reported, Circle’s January reserve report states that the firm held some $9.88 billion of cash deposited at regulated banks to back USDC’s value. While its official site states that on March 10, cash deposits in the reserves amounted to $11.1 billion.
The banking partners of USDC included Silicon Valley Bank (SVB), the California-based bank that was taken over by regulators and collapsed on March 10th, Friday.
The complete list of banks that held cash for Circle’s USDC includes Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank, Silicon Valley Bank, and Silvergate Bank. Additionally, Circle also keeps some part of USDC reserves in a dedicated BlackRock fund.
Simon Dixon, Chief Executive Officer of BnkToTheFuture—an online investment platform, tweeted that “$USDC 0.889 – It’s not $LUNA as it’s backed by cash, cash equivalents & treasuries to redeem to $USD but we don’t know how much was lost at Silicon Valley Bank yet so until any losses are covered by Circle $USDC MAY not be FULLY backed temporarily, hence the depeg whilst the FDIC works through $SVB.”
Major failure in the crypto and tech-linked banks shook the investors, and may have led to the crypto market crash. Most of the cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and Cardano (ADA), started declining in the last hour.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/03/11/circle-released-its-examination-report-after-svb-crisis/