USDC loses touch over news of reserves locked in Silicon Valley Bank

The U.S. dollar coin (USDC) lost parity with the U.S. dollar and hit an all-time low of $0.82 on some exchanges.

The drop came amid news that the stablecoin management company Circle disclosed that some of the reserves backing USDC were held by Silicon Valley Bank (SVB), which intervened on Friday (10th).

SVB is a California bank that specializes in investing in startups and technology companies.

On the 10th, the California Department of Financial Protection (FDIC) announced that SVB would intervene in its business.

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To protect banks’ insured depositors, the FDIC has created a national representative deposit insurance entity to insure customers’ investments.

That’s partly because, according to the FDIC bulletin, all depositors up to $250,000 have until the following Monday, March 13, to access their deposits.

The entity will pay depositors an amount equal to the deposit insurance limit as early as next week.

Depositors will receive a liquidation certificate in which the remaining deposit amount will be paid for by the sale of bank assets.

What does the circle say?

Circle said on its Twitter account that the transfer initiated on Thursday to remove the balance has not yet been processed, leaving SVB with $3.3 billion of USDC’s roughly $40 billion in reserves.

Circle will lock up the funds because it has more than $250,000 in the bank, and the FDIC will only insure depositors below that amount.

OSVB is one of six banking partners Circle uses to manage its approximately $9.9 billion in USDC cash reserves held.

Circle said in a statement that it is awaiting clarity on how the FDIC’s clearing of SVB will affect withdrawals by its depositors, while USDC will continue to operate normally.

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On Twitter, Circle said, “Like other customers and depositors who rely on SVB for banking services, Circle calls on this important bank to continue to thrive in the U.S. economy and will follow the guidance provided by state and federal regulators.”

That’s why last week the company withdrew a small portion of its stablecoin reserve deposits held by Silvergate Bank, another troubled financial firm linked to the FTX debacle.

Last month, Circle denied misinformation that the U.S. Securities and Exchange Commission (SEC) had issued a notice of investigation against the company.

The post USDC Lost Linked to Silicon Valley Bank Reserve Lockup News appeared first on BitNotícias.

Information source: compiled by 0x information from BITNOTICIAS.The copyright belongs to the author Jorge Siufi, and shall not be reproduced without permission

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