Cryptocurrency firm Circle said on Sunday all its depositors with the collapsed Silicon Valley Bank and Signature Bank will be made whole and the US$3.3-billion USDC reserve deposit held at Silicon Valley Bank will be fully available when banks open on Monday.
Circle’s announcement comes after the US administration on Sunday stepped in with series of emergency measures to shore up confidence after failure of Silicon Valley Bank and New York-based Signature Bank threatened to trigger a systemic crisis.
Circle said it did not have any stablecoin USD coin (USDC) cash reserves at Signature Bank and that the token remained redeemable at 1:1 US dollar peg.
Further, the crypto firm announced an automated USDC minting and redemption through Cross River Bank, effective on Monday, and said its expanded relationships also include USDC redemptions via BNY Mellon.
“Circle’s USDC operations will open for business, including with new automated settlement via our new partnership with Cross River Bank,” CEO Jeremy Allaire said in a tweet.
Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with “fiat” currencies — those backed by a central government rather than a physical commodity such as gold — for example through a 1:1 US dollar peg. USDC is the second biggest stablecoin with a market cap of $37-billion.
USDC lost its dollar peg and slumped to an all-time low on Saturday before recovering most of its losses when Circle assured investors it would honour the peg despite exposure to failed Silicon Valley Bank. — Akriti Sharma, Mrinmay Dey and Shubham Kalia, (c) 2023 Reuters