In January this year, Circle, the issuer of the stablecoin USDC, published a reserve report , which once again attracted attention when Silicon Valley Bank was shut down and taken over , because the report stated that some of USDC’s $9.8 billion cash reserves were stored in problematic banks. Silicon Valley Bank, according to Circle afterwards said a total of 3.3 billion US dollars.
USDC is currently the second-largest stablecoin in the market, with a circulating supply of around $43 billion and reserves backed by government bonds and cash assets, while Circle held $9.88 billion in cash deposits, according to Circle’s January reserves report.
When Silvergate Bank had liquidity problems at the beginning of the month, many institutions, including Circle and Coinbase, cut off from Silvergate . Regarding the incident, Circle tweeted on Saturday morning that of their USDC reserves of approximately USD 40 billion, USD 3.3 billion was still in circulation. stuck inside the closed Silicon Valley Bank and said it tried to withdraw money on Thursday but it was not processed.
Affected by the incident, USDC has de-pegged nearly 4% against the US dollar, trading at $0.95 at 11:45 am Taipei/Hong Kong time.
In addition, Binance has announced earlier that it will suspend the mechanism of automatically converting USDC into BUSD, saying it is a normal risk management procedure.
Circle’s banking partners include BNY Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank (a division of Flagstar Bank), Signature Bank, Silicon Valley Bank and Silvergate.
Signature Bank said in December it would reduce deposits tied to cryptocurrency companies by as much as $10 billion. The recent problems in banks that are friendly to cryptocurrencies and start-ups have worried investors, which indirectly led to a flood in the cryptocurrency market, and Bitcoin fell below the $20,000 mark.