- $3.3 billion of USDC Reserve that was held by Silicon Valley Bank is now 100% secure and accessible by Circle causing USDC to repeg.
- U.S. government announces a $25 billion funding program to support banks caught in a liquidity crisis.
- Circle partners with Cross River Bank for commercial banking services and automated settlement.
Circle, the company that issues USDC stablecoins, released a press statement stating that the $3.3 billion USDC reserve held at Silicon Valley Bank (SVB) was no longer at risk and that the funds would be accessible by the morning of Monday, March 13.
The risk was relieved by a joint statement that was released by the U.S. Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and FDIC Chairman Martin J. Gruenberg, which said that FDIC had received the approval “to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.” The release added that:
“Depositors will have access to all their money starting Monday, March 13. The taxpayer will bear no losses associated with the resolution of Silicon Valley Bank.”
USDC had depegged during the weekend due to the revelation that $3.3 billion of around $40 billion of its reserves was stuck in SVB, which had just been shut down by the California Department of Financial Protection and Innovation. However, due to the joint statement, it recovered from lows of $0.87 to be fully pegged at $1 at the time of writing.
Jeremy Allaire, Co-founder and CEO of Circle, praised the U.S. government for the additional funding initiative to support banks with liquidity crisis, saying:
“We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system. 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.”
The statement by Circle also announced that there were no USDC reserves held in Signature Bank, which had also been closed by U.S. regulators, hence no exposure. However, Allaire clarified on Twitter that due to the closure of Signature bank, Circle would not be able to process minting and redemption through SigNet, adding that the firm would alternatively rely on settlements through BNY Mellon for the time being.
Circle’s Plans Moving Forward
The top three banks that were friendly to companies in the crypto industry have all been closed, so most firms are finding alternatives to keep operations afloat. Nonetheless, there are still options for the industry, including Customers Bank, First Foundation Bank, Sutton Bank, Evolve Bank & Trust, Bankprov, Quontic Bank, and Cross River Bank, as listed by Cermak, Head of Research and Data at the Block.
Allaire, CEO of Circle, announced that Circle “will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow.” A few hours later, he revealed that the firm was onboarding a new partner, Cross River Bank, who will serve as its commercial bank and provide a new automated settlement.
Cross River Bank is already well known for its banking services to fintech and cryptocurrency companies like Visa and Coinbase and will now be producing and redeeming USD Coin.
Additionally, Circle has extended its relationship with other financial partners, such as Bank of New York Mellon (BNY Mellon), which already offers custody services for Circle’s reserves, to help with the redemption of USDC.