Silicon Valley Bank Panic: Circle Will Defend Its USDC Stablecoin “No Matter What”

I’m fine, don’t worry – As this week closed with theannounces great difficulties for Silicon Valley Bank carried away in the storm Circlethe issuer of USDC stablecoin. Jeremy Allaire’s company then unveiled a $3 billion exposure, reviving worries and other phantom fears of a catastrophic 2022. In this context, a clarification was necessary in order to avoid an atmosphere of the end of the world on the cryptocurrency market. This is what Circle did last night in a press release.

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Circle and the instability of stablecoins

In a recent blog post, Circle, one of the leading cryptocurrency companies, released an update on the distribution of its funds. This news comes in a context where the stability of stablecoins USDC, DAI, and USDD is in question.

There fall of Silicon Valley Bank, and the expectation of the reopening of banks on Monday raising the question of the dependence of the stablecoin on banks. It also raises questions about Circle’s ability to maintain USDC stability in times of market stress.

Circle and USDC: 3.3 billion exposure to Silicon Valley Bank and the markets are on fire

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Circle wants to be reassuring in the face of the bank panic

However, the company said it is actively working to diversify its reserves and improve the transparency of its fund management practices. It thus confirms that the USDC is guaranteed by:

  • $32.4 billion (77%) US Treasuries with a short 3-month maturity;
  • 9$.7 billion (23%) by cash held in institutions including the SVB.

In addition, the Circle specifies:

US Treasury bonds are the most liquid assets in the world and are direct obligations of the US government. These reserves are held by BNY Mellon, with active cash and asset management handled by BlackRock. Anyone can see the full liquidity ladder down to the CUSIP number on Treasury bills via the USDXX ticker.»

Circle

A well-protected USDC

Also note that Circle confirms having saved the furniture last Thursday. Helped by the words of FDIC (Federal Deposit Insurance Corporation), the company confirms that it is waiting for the opening of the banks on Monday to validate a new deposit of funds with the BNY Mellon to reduce the risk of exposure to BVS. This deposit is $5.4 billion.

USDC liquidity operations will resume as normal when banks open Monday morning in the United States. In practice, our teams are well prepared to handle significant volume, based on the strong liquidity and reserve assets discussed below. »

These developments come as competition in the stablecoin market intensifies with many players looking to offer stable and secure alternatives. In the face of this competition, Circle underscored its belief that USDC will continue to be a preferred choice for cryptocurrency investors and users. Moreover, despite the stablecoin stall this weekend the company persists and signs:

As a regulated payment token, USDC will remain redeemable 1 to 1 with the US dollar.»

This transparency of Circle on the allocation of its funds is important for investors looking to better understand the risks associated with stablecoins. Indeed, the stability of stablecoins is directly linked to the underlying assets that support them. Case to follow on Monday.

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