Circle, a blockchain payment technology startup that also issues USD Coins, acknowledged on March 10 that wire transfers initiated on Thursday to remove amounts had not yet been finalized, leaving $3.3 billion of its $40 billion in USDC reserves at Silicon Valley Bank (SVB).
Due to Circle reporting in its most recent audit that as of January 31, $8.6 billion, or nearly 20% of its reserves, was held up in multiple financial institutions, including the newly bankrupt Silvergate and shuttered SVB, worries about USDC have been mounting as of late this week.
In an effort to be transparent, Circle stated on March 10 through Twitter that “$3.3 billion of the approximately $40 billion of USDC reserves remain at SVB” after receiving confirmation at the end of the day that the wires started on Thursday to remove balances had not yet been processed.
Circle asserted that it has joined other clients and depositors in urging SVB to remain operational, claiming that this is crucial for the health of the US economy. Circle announced on Twitter that it will abide by the instructions given by local, state, and federal agencies.
The company’s chief strategy officer and head of global policy emphasized, in addition to what Circle had already said, that “Circle is currently protecting USDC from a black swan failure in the U.S. banking system,” while also urging the Federal Deposit Insurance Corporation (FDIC) to implement an SVB rescue plan:
Without a federal rescue plan, business, banks, and entrepreneurs will be more severely affected. Incidentally, according to CoinGecko statistics, USDC was trading below the $1 peg at $0.98 before to the announcement. But, shortly after, the price sharply plunged to $0.93 at the time of writing.
In the wake of Silicon Valley Bank’s closure by California’s financial watchdog as the first FDIC-insured bank to fail in 2023, the statement was made. Silicon Valley Bank was a prominent financial institution for venture-backed enterprises.
The California regulator named the FDIC as the receiver to protect insured savings, despite the fact that the precise cause of the shutdown is still unknown. A number of venture capital firms with a focus on cryptocurrencies, notably Andreessen Horowitz and Sequoia, received banking services from SVB, one of the 20 largest banks in the United States by total assets.