Circle Will Cover “Any Shortfall” In USDC Reserves, Immediate Price Increase

In Altcoin News yesterday, you could read that USD Coin (USDC), the second largest stablecoin issued by Circle, is no longer pegged to the US dollar. USDC prices even dropped to as low as $0.87 on some cryptocurrency exchanges. The crash was tied to Circle’s significant exposure to the defunct Silicon Valley Bank (SVB).

In the meantime, Circle said in a blog post that it will “support USDC and cover any shortfalls with corporate resources, using external capital as necessary.”

Circle Contact SVB

News broke last week that SVB had been shut down by US regulators due to financial instability. Circle holds a total of $3.3 billion in USDC collateral in SVB, or roughly 8% of total reserves.

Just before the crash, it tried again to withdraw $3.3 billion from SVB, but failed to do so in time. Many cryptocurrency investors sold their USDC as quickly as possible after Circle’s announcement.

USDC exchange rate rises again towards the US dollar

In a blog post, Circle said it will resume normal operations when U.S. banks open their doors on Monday, and that USDC will continue to be exchanged one-for-one with the U.S. dollar.

Circle hopes that the FDIC, the U.S. regulator overseeing SVB’s management, will find a buyer for SVB and ensure depositors don’t suffer losses.

It also indicated that the FDIC is currently determining the status of transactions initiated before the bank closed, with transfers initiated on Thursday likely to be processed on Monday.

At the time of writing, the value of USDC has risen to $0.95, according to data from CoinMarketCap.

Source of information: Compiled from CRYPTO-INSIDERS by 0x Information.Copyright belongs to the author Ivo Melchers, without permission, may not be reproduced

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