USDC Stablecoin Value Recovers After Dipping as Low as 86 Cents
The USDC stablecoin has regained its dollar peg after regulators said Silicon Valley Bank depositors would be made whole.
USDC had dipped to as low as 86 cents due to concerns about its issuer, Circle, having funds at the bank that was closed and put under the receivership of the Federal Deposit Insurance Corporation (FDIC) on Friday (March 10), CoinDesk reported Monday (March 13).
The stablecoin’s value had fallen as holders redeemed their tokens and as Circle specified that 8% of the funds backing USDC were held at Silicon Valley Bank, according to the report.
At the time, it was uncertain how much of the uninsured amount would be recovered and when Circle would be able to do so, the report said.
USDC had begun to recover value, climbing back to 97 cents after Circle said it would use corporate funds to replace any funds that could not be recovered, per the report.
It then regained its dollar peg after the U.S. Treasury Department, the Federal Reserve and the FDIC said in a joint statement that all Silicon Valley Bank depositors would be made whole and would have access to their funds on Monday, the report said.
Following that joint announcement by the regulators, Circle said in a Sunday (March 12) press release that the USDC reserve risk had been removed and that the dollar de-peg had been closed.
The firm added that no USDC cash reserves were held at Signature Bank, a financial institution that was closed by regulators on Sunday.
“Trust, safety and 1:1 redeemability of all USDC in circulation is of paramount importance to Circle, even in the face of bank contagion affecting crypto markets,” Circle Co-founder and CEO Jeremy Allaire said in the release.
“We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system,” Allaire added. “We’ve long advocated for full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk.”
In a Sunday post on Twitter, Allaire said Circle had formed a new partnership with Cross River Bank to launch new automated settlement.