After assurance from CEO Jeremy Allaire that its reserves are secure and the company has new banking partners lined up for “banking open tomorrow morning,” Circle’s stablecoin USD Coin (USDC) is climbing back to its $1 peg. The value of USDC is currently $0.99, up 3.3% over the last day, according to data from CoinGecko.
Concerns regarding the $3.3 billion in USDC reserves held at Silicon Valley Bank (SVB), which was shut down by the California Department of Financial Protection and Innovation on March 10, caused the price to fall to as low as $0.87 over the weekend. Moreover, Circle has an undisclosed sum of reserves stranded in the recently insolvent Silvergate.
In a thread on Twitter on March 12, Allaire praised the Federal Reserve and the U.S. government for their $25 billion funding program to assist banks like SVB that were experiencing liquidity issues. She said, “100% of USDC reserves are also safe and secure, and we will finish our transfer for remaining SVB cash to BNY Mellon. As previously stated, USDC liquidity operations will start up again tomorrow morning when banks open.
The collapse of cryptocurrency-friendly Signature Bank on March 12 made it impossible for Circle to handle USDC minting and redemption through SigNet, and Allaire said the company will temporarily “rely on settlements through BNY Mellon.”
But the CEO stressed that things will move swiftly in this area because Circle would “possibly be bringing on a new transaction banking partner with automated minting and redemption tomorrow.”
Allaire’s remark and the Federal Reserve’s comments have resulted in a huge increase in asset prices across the board, with the entire market cap of all cryptocurrencies now above $1 trillion after falling precipitously to $961 billion on March 11.
In the last 24 hours alone, assets including Bitcoin (BTC), Ether (ETH), Cardano (ADA), Polygon (MATIC), and Solana (SOL) have increased by a whopping 10.6%, 11.4%, 12.3%, 11.7%, and 15.1%, respectively.Remarkably, this is true despite the collapse of Signature Bank.
Following the closing of Silvergate and SVB, Signature was regarded as the final crypto-friendly bank in the United States. However, it is currently unknown what the main financial on-and-off ramps into cryptocurrency are.