Stablecoin USDC rises back toward $1 as $3.3 billion in Silicon Valley Bank to be made available following fears uninsured deposits could be lost
Yuichiro Chino
- USDC was close to regaining its peg to the dollar on Monday after breaking below that level amid SVB's collapse.
- Stablecoin issuer, Circle, said it had $3.3 billion in cash reserves at the bank.
- Those funds would be made fully available after the government's bailout of depositors over the weekend.
It's been a tumultuous week for the world's second-largest stablecoin, USDC, after one of crypto's key banking on-ramps collapsed.
The USD coin lost its dollar peg after its issuer, Circle, said it had $3.3 billion in cash reserves held at the fallen Silicon Valley Bank (SVB). The USD coin was rising back to $1 after trading as low as $0.86 over the weekend on fears that uninsured deposits could be lost.
Stablecoins are billed as a less volatile way for investors to enter and exit the digital asset ecosystem because they're backed by real-world assets like US dollars and short-term government debt. They are designed to trade at $1.
SVB has been a critical lender for US tech startups broadly, with its collapse marking the biggest banking failure since the 2008 financial crisis.
Circle reiterated that its stablecoin is fully backed and that the $3.3 billion USDC reserve deposits held at SVB will be fully available on Monday. On Sunday, the Federal Reserve, US Treasury, and Federal Deposit Insurance Corporation said that the government will also step in so that depositors of SVB will have access to their money.
USDC has gotten closer to regaining its peg to the dollar after the reassurance, trading at around $0.99 on Monday, according to CoinDesk data.
"The announcement by the U.S. Treasury, Federal Reserve and Federal Deposit Insurance Corporation that from today all depositors at Silicon Valley Bank (SVB) will have access to all their money reassures both traditional and crypto markets," Bradley Duke, co-CEO at financial services firm ETC Group, told Insider.
"Furthermore, it means that Circle, the issuer of the popular Stablecoin USDC, which holds part of the USD backing the coin at SVB, is now out of the woods, which is a huge positive for the crypto world."