Following the closure of Silicon Vally Bank (SVB) which resulted in a dollar de-peg in USDC, Circle, the stablecoin issuer is now thriving to recover the stablecoin. Earlier today, Circle announced that it will recover the $3.3 billion funds stuck with Silicon Valley bank.
According to the firm, “the $3.3B USDC reserve deposit held at Silicon Valley Bank” which is “about 8% of the USDC total reserve, will be fully available when U.S. banks open this morning.” Circle further added assuring that it has no funds with the other major bank regulators have shut down.
“No USDC cash reserves were held at Signature Bank. As a regulated payment token, USDC remains redeemable 1:1 with the U.S. Dollar,” Circle noted in the announcement.
How It All Began
Notably, this news comes after Circle confirmed on Saturday that it had about $3.3 billion reserve deposit stuck in Silicon Valley bank. The firm was unable to withdraw the reserve deposit as the bank was shut down by the US regulators.
Almost immediately after Circle disclosed the information, USDC, de-pegged from the dollar and plummeted by more than 10% to trade at $0.8832. According to on-chain data, Circle redeemed $1.4 billion USDC in 8 hours.
In order to reduce exposure, crypto companies, such as Coinbase and Jump Trading, followed suit and redeemed approximately $850 million and $138 million USDC, respectively.
It is worth noting that prior to the USDC de-pegging saga, Circle already planned to initiate a wire transfer on March 9 to remove its funds from Silicon Valley Bank as the Federal Deposit Insurance Corporation-insured bank was about to shut operations.
However, the initiation was unsuccessful as the firm later announced on Saturday that the wire transfers were not wholly processed, and $3.3 billion of USDC reserves are still stuck with SVB.
Circle To Expand Banking Partnerships
Furthermore, Circle announced in the announcement its automated USDC minting and redemption for customers with new banking partners set to go live later this week. According to Circle, this move is part of its commitment to broaden its banking partnerships.
Jeremy Allaire, Co-founder and CEO of Circle noted, “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.”
Allaire added, “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.”