• Circle plans to use corporate resources to cover the shortfall on its reserves after Silicon Valley Bank was shut down by the California Department of Financial Protection and Innovation.
• USDC liquidity operations will resume as normal when banks open on Monday morning in the United States, enabling USDC redemption at 1:1 with the U.S. dollar.
• The Federal Deposit Insurance Corporation was appointed as the receiver to protect insured deposits.
Circle Plans To Cover Missing Liquidity With Corporate Funds
According to Circle, USDC liquidity operations will „resume as normal when banks open on Monday morning in the United States,“ enabling USDC redemption at 1:1 with the U.S. dollar. In response to Silicon Valley Bank’s (SVB) shutdown, Circle stated that it plans to use „corporate resources“ in order to cover any shortfall on its reserves.
Background Of SVB Shutdown
Silicon Valley Bank is one of the biggest lenders in the United States and a major player in venture-backed companies. The bank was shut down on March 10 by the California Department of Financial Protection and Innovation, fueling fears about its future. The Federal Deposit Insurance Corporation was appointed as the receiver to protect insured deposits which leaded significant losses and caused a short-term liquidity crunch for SVB leading them to sell long-duration assets to meet redemption demand.
In an official statement released by Circle they stated that they believe SVB is “a venerable and trusted partner to the US innovation economy” which suffered a “classic bank run, much like those we saw during financial crisis in 2008” due to few traditional banks having sufficient liquidity against such runs. They also expressed their hope that FDIC would find a solution that protects customers‘ assets 100%.
USDC Market Cap
USD Coin (USDC) is currently one of world’s second biggest stablecoin with market cap over $42 billion since January 31st 2021 which serves as collateral for many stablecoin ecosystems according Cointelegraph reports earlier this year .
Circle has been quick response towards SVB incident by using corporate resources while FDIC still deciding their fate this weekend which should provide some comfort level for investors who are worried about their investments safety while keeping USD Coin price slowly recovering from depegging from U.S Dollar .