In an official statement, USDC issuer Circle stated that it would resume normal operations from Monday and that the stablecoin will be redeemable one-for-one with the U.S. dollar. This comes after the firm devised a plan to utilize their “corporate resources” in order to cover any shortfall in its reserves following the bank’s abrupt shutdown on March 11.
Circle Might Use External Funding
According to an official blog post published by Circle, the business stated that in case the bank failed to return the necessary cash holdings, it would support its stablecoin by covering it with company resources. Additionally, Circle also declared that it would seek external funding if such a scenario arises.
The announcement came after the stablecoin dropped below its $1 peg on March 11 and traded as low as $0.87 before gradually re-pegging itself at $0.97 at the time of writing. Shortly after Circle revealed that $3.3 billion of USDC reserves was held at Silicon Valley Bank, the USDC’s price depegged from its original $1 on Friday.
Sharing an Update on USDC and Silicon Valley Bank. https://t.co/Ug3qpot8sJ
— Jeremy Allaire (@jerallaire) March 11, 2023
Circle Attempted Withdrawing Prior Collapse
Circle has stated that it made an effort to relocate its assets before SVB went kaput and that the transaction may be finalized on Monday, when normal operations at U.S. financial institutions are expected to resume. The firm was quoted as saying:
We have reason to believe that under applicable FDIC policy, transfers initiated prior to a bank entering receivership [bankruptcy] would have otherwise been processed normally.
The well-known Silicon Valley Bank, which was the preferred bank for venture capitalists and early-stage startups, was shut down by the California Department of Financial Protection on Friday. Although not as alarming as the Silvergate situation, many in the crypto community were shocked to learn that Circle had a significant exposure to the failing bank.
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